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Crypto brethren have boosted house prices as the wealth effect has hit real estate markets, study says

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Crypto brethren have boosted house prices as the wealth effect has hit real estate markets, study says

It’s an oft-told anecdote shared on social media: Those who invested in cryptocurrencies early have enjoyed life-changing wealth.

How much that extra money gives them the confidence to spend more — a phenomenon economists call the wealth effect — is a hot topic whenever cryptocurrency prices rise. A group of researchers tried to quantify this and determined that cryptocurrency goldmines in the United States aren’t exactly being spent as windfalls from winning the lottery. And so far, the effect has been relatively modest on America’s $28 trillion economy. But if the asset class continues to grow, the study provides insight into potential changes in consumption patterns.

The new wealth has increased household consumption by about $30 billion in total over a decade, researchers estimate, with every dollar of unrealized gains leading to about nine cents in spending. While this figure is almost double the marginal propensity to consume when it comes to stock market returns, it is about a third that of income shocks such as lottery winnings. For all the flexibility on social media, not all was wasted on Lamborghinis and bling: Some focused on buying homes, spurring real estate markets where cryptocurrencies are popular.

“If families tend to view cryptocurrencies as gambling, then we would expect them to spend their earnings in ways similar to those of lottery winners.” Darren Aiello, assistant professor of finance at Brigham Young University’s Marriott School of Business and one of the study’s authors, said in an interview. “Instead, our estimates suggest that household spending from cryptocurrency-related earnings is more similar to the patterns we see in traditional equity investments.”

It’s a topic that’s likely to attract more attention from economists after this year’s launch of spot-Bitcoin exchange-traded funds expanded the universe of potential cryptocurrency investors.

The researchers, who presented the paper to the Federal Deposit Insurance Corp. in March, also come from Northwestern University, Emory University and Imperial College London. They used data on 60 million people from 2010 to 2023, covering millions of banking, credit and debit card transactions, to analyze how crypto wealth flows into America’s real economy. They found that 16% of analyzed households made deposits on retail cryptocurrency exchanges at some point in the decade to 2023.

Linking cryptocurrency spending and investing can be tricky, as some may invest in the asset class in hopes of boosting their savings to make a large purchase, rather than only deciding to make a large purchase after a cryptocurrency windfall. As a result, the researchers isolated the portion of households’ cryptocurrency earnings that were driven by long-term purchases and holdings, rather than recent investments, in order to directly measure the causal effects of cryptocurrencies on spending.

“There is significant debate about what role cryptocurrencies should play in a household’s portfolio due to their high volatility and cloudy fundamentals.” Jason Kotteranother assistant professor of finance at BYU and co-author of the study said in an interview.

For Noelle Acheson, author of the Crypto Is Macro Now newsletter, insights into how cryptocurrencies appeal differently to different types of investors are more noteworthy than conclusions about macroeconomics. “For low-income investors who place less priority on wealth preservation, an allocation to cryptocurrencies could be seen as a make-or-break bet: more to gain than to lose,” she said. “So it makes sense that any earnings would be spent on high-value assets like a house.”

Real estate market

While the increase in wealth was mostly poured into discretionary spending, a significant portion trickled into local real estate markets, the researchers found, especially in parts of California, Nevada, Utah and other places where cryptocurrencies are popular .

To arrive at a figure, the researchers went back in time to 2017, a year in which Bitcoin saw its price jump from around $950 to $14,000 in a rally of nearly 1,400%. Using zip codes associated with brokerage accounts, they compared what happened to home prices in counties with high cryptocurrency wealth versus those less enthusiastic about digital assets. They found that home prices in cryptocurrency-rich counties grew 43 basis points faster, pushing the average home price by about $2,000 in 12 months.

They analyzed what it would look like in the decade to 2023, and found that every dollar gained in household crypto wealth pushed up the average house price by 15 cents over the next three months.

The researchers also tracked investors who withdrew at least $5,000 from their cryptocurrency brokers, of which about 90% came from CoinBase Global Inc. – between 2018 and 2023. That analysis revealed that Americans increased their total spending in the year after a large withdrawal by about $5,754 compared to the previous year. And while mortgage spending remained steady in the six months before the large withdrawals, it increased significantly after the event.

“For every household that withdrew $5,000 from their cryptocurrency exchange account, one in 20 purchased a home for the first time,” Kotter said.

After all, you can’t live in a Lambo.

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We are the editorial team of TokenTalk, where seriousness meets clarity in cryptocurrency analysis. With a robust team of finance and blockchain technology experts, we are dedicated to meticulously exploring complex crypto markets with detailed assessments and an unbiased approach. Our mission is to democratize access to knowledge of emerging financial technologies, ensuring they are understandable and accessible to all. In every article on TokenTalk, we strive to provide content that not only educates, but also empowers our readers, facilitating their integration into the financial digital age.

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OpenAI co-founder announces his new company, AI tokens rally

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OpenAI co-founder announces his new company, AI tokens rally
  • Former OpenAI co-founder Ilya Sutskever announced Wednesday the launch of a new artificial intelligence research lab in the United States.
  • News of the launch of Safe Superintelligence Inc. catalyzed gains in AI-related crypto tokens.
  • The market capitalization of the AI ​​category increased by 12% in the last 24 hours.

Artificial intelligence (AI) crypto token prices rise on Thursday following news that OpenAI’s co-founder has started his own company. Ilya Sutskever, former chief scientist at OpenAI, announced the launch of a security-focused AI research lab in Palo Alto and Tel Aviv, US.

The news comes amid concerns regarding the security aspect of Artificial General Intelligence (AGI), under development at OpenAI.

According to data from CoinGecko, the market capitalization of AI tokens increased by 12% in the last 24 hours.

AI Tokens See Huge Price Gains

AI tokens such as Near Protocol (NEAR), Fetch.ai (FET), Internet Computer (ICP), Render (RNDR), Bittensor (TAO), The Graph (GRT), SingularityNET (AGIX) and Akash Network (AKT) extended gains in recent 24 hours, according to CoinGecko data.

AI tokens

AI tokens

The rally can largely be attributed to the announcement of the new company, Safe Superintelligence Inc. The team consists of former co-founder Ilya Sutskever, American entrepreneur Daniel Gross and Daniel Levy, a research assistant at the laboratory of computer scientist Stephano Ermon . Sutsekever served as chief AI scientist at OpenAI and focused on the “safety” aspect when developing AGI.

The announcement of the fundraising for Artificial intelligence projects from hedge funds and Venture Capital is another catalyst that will likely fuel gains in this token category. Pantera Capital announced on June 19 its decision to invest $200 million in artificial intelligence ventures, according to a report by DLNews.

Major crypto funds are raising $1 billion, of which AI will receive a 15 to 20% investment. This development is another market driver, which is likely to influence investor sentiment towards AI tokens.



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LayerZero’s ZRO token airdrop with mandatory donations is live

TokenTalk Staff

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LayerZero's ZRO token airdrop with mandatory donations is live

“ZRO Claims is live” Source: LayerZero Foundation on X.

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Complaints about LayerZero’s new ZRO token it went live today, but the airdrop mechanic required a 10 cent donation for each token participants wish to receive. This initiative, announced via an X post, binds symbolic statements to direct donations to the Protocol Guild, with the goal of aligning long-term commitment with the LayerZero protocol.

LevelZero underlined the innovative aspect of this approach, stating that, by donating, eligible recipients “show a long-term alignment with the LayerZero protocol and a commitment to the future of cryptocurrencies.”

The foundation will match donations up to $10 million, marking the first instance of mandatory donation for airdrop requests in the cryptocurrency industry.


SapphireSapphire


SapphireSapphire

Reception from the crypto community has been mixed. Some users disapproved of the mandatory donation, while others appreciated the development support. The airdrop will see 85 million ZRO tokens available for distribution, with over 50% reserved for key investors and contributors as part of a three-year vesting program.

Despite some dissatisfaction, LayerZero’s ZRO token is highly anticipated, trading at $4.27 in pre-market futures. It is expected to launch on exchanges like Binance at midday UTC, although it appears that the exchange has done so postponed this at 13:00 UTC.

LayerZero’s airdrop eligibility checker, released the day before, also drew criticism from DeFi users. Many expressed frustration with the small assignments despite significant use of the protocol. The allocation process appeared to favor holders of specific NFTs, such as Pudgy Penguins and Kanpai Pandas, over those with a high number of transactions or Gh0stly Gh0sts NFTs.

Approximately 1.28 million wallets are eligible for the airdrop, with 8.5% of the total community allocation of 23.8% to be distributed initially. The remaining tokens will be distributed over the next three years through various incentives and rewards.

The pre-market valuation for ZRO is $4.50, representing a fully diluted value of $4.5 billion. However, the state of airdrop farming is causing growing frustration among users, with decreasing investment returns and oversaturation of protocols.

Echo.xyz founder Cobie commented on these growing concerns, said: “If you’re a founder, IMO, you’re probably thinking about never doing an airdrop again these days; now the disadvantages are much greater than the advantages.”

LayerZero also received criticism back when asked the farmers of Sybil to self-report. Next up, LayerZero CEO Bryan Pellegrino confirmed that up to 100,000 wallets have self-reported their Sybil activities.

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Will AGIX and OCEAN AI tokens lead the bullish rally with a massive price breakout?

TokenTalk Staff

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Will AGIX and OCEAN AI tokens lead the bullish rally with a massive price breakout?

The Artificial Intelligence (AI) category continues to dominate the cryptocurrency market for the second day in a row, indicating a growing dominance of AI tokens over elite cryptocurrencies in the crypto space.

In particular, Fetch.ai (FET) Price. and Turbo (TURBO) posted the highest gains in the AI ​​category over the past day. Additionally, SingularityNET (AGIX) and Ocean Protocol (OCEAN) have seen similar trends adding over 20% to their respective portfolios, highlighting more bullish action.

With the ongoing bull market, will AGIX and OCEAN prices rise another 30% this month? Let’s go, as in this article we have covered the price analysis and market sentiments for SignularityNET (AGIX) and Ocean Protocol (OCEAN) for this month.

SingularityNET suggests another price hike this month?

After showing bearish price action since the beginning of the month, AGIX price has shown strong bullish price action this week by adding 24.55% to its portfolio in the last 24 hours. Furthermore, the altcoin has increased by 35.02% in the last 2 days, highlighting a greater positive influence.

TradingView: AGIX/USDT

The technical indicator, SMA, shows a positive crossover in the 1D time frame, indicating an increase in buying-selling pressure for the AGIX cryptocurrency in the market.

On the other hand, the Relative Strength Index (RSI) registers a sharp increase below the oversold range, highlighting a growing bullish sentiment in the cryptocurrency sector. Furthermore, the average shows bullish convergence, suggesting that the price will continue to gain value this week.

If AI tokens continue to experience positive influence from the cryptocurrency market, the AGIX coin price will prepare to test its upper high of $1 in the coming times. However, if investors start to take profits, SingularityNET price will plummet towards the lower support level of $0.380.

The OCEAN price records a bullish reversal:

Ocean Protocol price has seen a strong bullish reversal on its price chart below its important $0.5930 level, resulting in a valuation increase of around 35% this week. Furthermore, with the growing positive influence, OCEAN price is expected to continue gaining value this week.

TradingView: OCEAN/USDT

With a trading price of $0.6741, a circulating supply of 1,408,900,141 OCEAN Tokens and a total supply of 1,410,000,000 OCEAN Tokens, Ocean Protocol cryptocurrency has successfully secured the 153rd position on the global list of cryptocurrencies with a market capitalization of $378.332 million.

The moving average convergence divergence (MACD) shows a steady decline in the red histogram, indicating an increase in price action for the AI ​​token in the crypto space. Furthermore, the averages register a high possibility of bullish convergence, suggesting a positive outlook.

If the market is trading with a bullish sentiment, Ocean Protocol price will prepare to test its upper resistance level of $0.9990 this month. On the contrary, if a bearish reversal occurs, the OCEAN cryptocurrency would plummet towards its important support level of $0.5930.

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