Turning Crypto Wealth into Real Wealth…

“We’re not gonna roundtrip it this time!”

That, perhaps, is the big takeaway from the Token2049 crypto conference I attended last week in Dubai.

This year’s version drew thousands of investors and lots of big names in crypto, including Jeremy Allaire, founder of Circle, the company behind USDC, one of the world’s largest and most important stablecoins; and Arthur Hayes, founder of Bitmex, one of the original crypto exchanges and one of the most followed voices in the crypto space.

But what really resonated with me was the insistence that “we’re not gonna roundtrip” this time.

I had several people utter that phrase or something similar to me or within earshot—a refusal to once again ride crypto to all-time highs, and then get greedy and suffer as the bottom falls out.

Those of us in the crypto space for longer than a minute remember the crypto collapses of 2017 and 2022.

Max pain.

We don’t want to ride that dragon back down again.


What to do?

Well, the answer to that question is about more than just crypto actually.

We are in a uniquely risky moment globally for all the reasons I’ve been writing about for many a month—extreme US and Western debts, extreme US debt-repayment costs, extreme politics in the US (and increasingly in Europe) that threaten democracies. Roundtripping crypto is, at this point in late-stage capitalism, no different than roundtripping the dollar… or roundtripping democracy for that matter.

I won’t get into that, though. Not looking to turn today’s dispatch into another sad story of the dollar or political discourse.

I will stay focused on crypto, just as the many people I met in Dubai are intensely focused on crypto this time around too.

We’ve all lived through the depression of watching our investments grind toward zero, refusing to sell because we all believed the rebound to new highs was just around a corner that, sadly, never came.

So even though we’re still early into the current crypto bull market—bitcoin will likely 3x from current prices, gaming and AI tokens will 10x or more—crypto veterans are already planning their exit in terms of where they want to put some of their crypto wealth to work.

Most don’t really care much about the stock market.

Few have any real clue about the bond market. And even if they did, when you’re bagging 10x, 100x, 1,000x gains on a crypto token, the 15% or 20% annual gain you might see in bonds in a favorable year is chump change.

Plus, lots of crypto players recognize the dollar is The Next American Horror Story and that the US debt situation is untenable. The savvy ones don’t want to be fully dependent on the dollar and the US economy, just in case our worst fears are proven right and the US currency goes pear-shaped.

Instead, many are beginning to talk about real estate.

Particularly real estate abroad, which gets them outside the greenback and outside Uncle Sam’s financial Eye of Sauron.

I had several conversations in Dubai about putting money to work in rental properties in high-demand overseas vacation markets in Portugal, Spain, and along the east and west coasts of Mexico.

For what it’s worth, Portugal seems to garner the most interest, likely because the country has become well-known in crypto circles. Portugal is highly crypto friendly with a 0% tax on crypto profits, and Lisbon continues to host numerous crypto conferences, which expose people to the city’s beauty, charms, and relatively inexpensive lifestyle.

That’s just an explanatory aside. I’m not trying to sell you on Portugal specifically in this dispatch…

What I am trying to sell you on is the idea that all of us in crypto need to think about converting some portion of our Magic Internet Money into hard assets, preferably outside the dollar. That means thinking like the crypto bros and brosephinas I chatted with and who are consider putting some money to work in real estate in certain overseas markets.

The benefits are manifold.

  1. Exposure to a non-dollar asset.

The greenback, which has been in decline since late 2021, has recently popped higher because of worries the Federal Reserve might not cut interest rates as fast as Fed governors initially anticipated back in December.

Those worries are bubbling up as the EU in particular talks about cutting rates soon, following the likes of Switzerland, which has already cut rates. (Lower EU rates at dollar rates remain elevated gives strenght to the buck.)

But the dollar’s downtrend is destined to resume because of the debt. America has to cut rates sooner rather than later to manage the country’s debt-payment costs that are ballooning out of control. As soon as the US does begin cutting interest rates—a certainty—the dollar starts to decline again.

And to be clear, this is a long-term decline.

The dollar, as measured by the Dollar Index that tracks the buck against a basket of world currencies, has been fundamentally weaker since the mid-80s—represented by a string of lower lows and lower highs. It’s an ever-downward slope.

That mega-trend has many more years to play out before the US cleans is disastrously filthy financial house.

A Dollar Index in decline means, by definition, that the greenback is losing value against other currencies. As that happens, assets priced in those other currencies rise in dollar terms. So if you bought an apartment in Portugal, for instance, for €400,000 today, it would cost you about $428,000 in dollar terms.

But when the dollar slides by, say, 15%, your $428,000 investment is worth more than $500,000, even if the price of your Lisbon pied-à-terre doesn’t change.

That’s the power of owning a foreign asset when the buck is declining…

  1. Inflation protection.

Global inflation is a thing now. I’d call it is an almost-permanent new reality.

There’s simply way too much Western debt in the global financial system, and all that debt is forcing countries to print more and more money to make interest payments to their bond holders.

Those interest payments, in the form of newly printed currency units, are pouring back into the global economy, helping fuel inflation.

And inflation has historically been a boon to real estate since people watching their cash lose purchasing power shovel it into hard assets like gold and real estate.

  1. Rental income.

The real estate I want to own, and which I encourage others to own, is apartments and condos in high-traffic tourist locations near beaches and golf courses in the warm parts of the world, which is why I mention Spain, Portugal, and Mexico. I’d throw Costa Rica in there, too.

Vacationers love beaches. Sun, sand, and waves are an endless draw. And the world is packed with golfers who want to play courses near beachy destinations.

That translates into a continual source of renters. Northern Europeans, in particular, love escaping to southern Europe in winter to get away from the cold and snow… and they love escaping to southern Europe in the summer for a family beach vacation.

Americans, meanwhile, love flocking to Mexico and, increasingly, Costa Rica and Panama because they’re all so close that flight times are just a few hours at most.

Incessant demand for high-end properties in beach/golf destinations is a great source of income.

Combine all three of those bullet points and you have all the reasons you need to consider converting wealth—be that stock market or crypto market wealth—into quality real estate offshore.

That’s what I’ll be doing with some of my crypto wealth through one of my colleagues who is the world’s foremost guru on buying high-performance vacation properties overseas. I’m considering Tulum, Mexico, though Spain and Costa Rica are on the radar too. Something like this:

All of those are in Mexico. All in the low- to mid-$200k range.

Owning non-dollar assets such as real estate is a great buffer against dollar decline, ongoing inflation, and a source of continual rental income.

Inflation will drive the value of real estate higher since it’s a hard asset that routinely benefits from rising prices.

And because overseas real estate is priced in non-dollar currencies, the value of the property will rise in dollar terms as the dollar declines in value against the local currency.

Plus, you’re getting that income kicker that also benefits from inflation and the dollar’s decline… and real estate overseas is a non-reportable asset to the IRS, so there’s that too.

Not hard to see why the crypto bros are suddenly talking about real estate as their play—so they don’t “roundtrip” their wealth once again…

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