It’s undeniable that Millennials and Gen Z are facing financial challenges that their parents never really experienced. And while there are many reasons, some of the main causes for this generational gap are the soaring real estate prices and the fact that traditional financial assets have become increasingly inaccessible for many within the younger generations.
As these traditional financial instruments feel increasingly inaccessible, some newer and less conventional wealth-building strategies have become more popular among those born in the internet era. What strategies? Bitcoin and crypto, of course.
With big financial giants such as BlackRock, Fidelity, and BNY Mellon recently embracing the digital assets revolution, many are now wondering whether Bitcoin and crypto will become the new path to homeownership—or even surpass real estate as a preferred investment vehicle.
The decline of real estate
The decline of real estate can largely be attributed to the aftermath of the 2008 financial crisis and post-pandemic inflation, which has led to soaring real estate prices and put homeownership out of reach for most Millennials and Gen Z, whose parents already owned one or more properties at their age.
During the last decade, the average home price rose 74% while average wages increased only by a factor of 54%. According to Charles Schwab, Millennials own significantly less wealth than Baby Boomers—a big reason why there is less interest in real estate.
At the same time, another trend has been observed: traditional real estate investors are shifting away from physical assets and into Bitcoin due to its compelling growth prospects and liquidity advantages.
Is Bitcoin a new form of property?
Michael Saylor, MicroStrategy’s chairman and vocal Bitcoin advocate – among others – recently defined Satoshi Nakamoto’s creation as “digital property” because of the similarity between the limited supply of highly desirable real estate assets and the world’s first cryptocurrency.
Saylor famously said, "nobody is trying to buy a cup of coffee with a fraction of their building on 5th Avenue," to emphasize that Bitcoin’s properties make it a much better store of value rather than a medium of exchange.
This is particularly true during the period of persistent inflation the world is going through, with younger peoples’ salaries often not being able to keep up with the increase in prices and lack of investments that can appreciate together with the cost of living.
Beyond the limited supply, Bitcoin also offers significantly higher levels of liquidity and ease of transaction. These are qualities that are particularly appealing to young investors who may not intend to settle in one place or be limited in their ability to move. One can think about the recent trend of digital nomads, who overwhelmingly fall in the Millennial or Gen Z demographics, and have very different goals and lifestyles compared to their parents and grandparents.
Relai—a leading Swiss exchange—confirmed the trend, observing that real estate investors, private clients, and businesses have been, “flocking to Bitcoin, [considering it] the ultimate hedge against central banks and the dangers they bring with unexpected rate cuts.”
Bitcoin specifically shares unique characteristics with real estate, such as a low time preference and a consensus mechanism grounded in physics and cryptography, rather than human decisions or government interventions.
A generational shift in progress?
According to a recent Policygenius survey, “Gen Zers” are more likely to own cryptocurrency (20%) than they are to own stocks (18%), real estate (13%), or bonds (11%).
Another survey by Charles Schwab recently found that 62% of Millennials intend to invest in a crypto ETF in 2025, compared to 44% for Gen X and 15% of Baby Boomers.
While assets such as gold and bonds remain popular among the older generations, young investors are now seeking a new inflation hedge in alternatives like Bitcoin. As a consequence, products such as Grayscale Bitcoin Trust (GBTC) and iShares Bitcoin Trust ETF (IBIT) are increasingly preferred over traditional equities like Berkshire Hathaway among Millennials.
While the macroeconomic environment is still quite uncertain, I expect the above-mentioned trend to continue, with traditional investment capital flowing into Bitcoin. This is particularly true for younger generations such as Millennials who, despite only representing a relatively small share of total wealth, are gaining significant exposure to this new asset class.
Only a few years ago, gaining crypto exposure was difficult or subject to high counterparty risk. Today, it’s enough to request a purchase of Bitcoin ETFs on your 401(k) or simply buy it on Venmo. No seed phrases, hardware devices, or need to conduct due diligence on suspicious exchanges.
Just like all other generational shifts, this will not be immediate. However, the implications for the real estate sector could be massive, with many Millennials and Gen Zers potentially choosing to sell their parents’ properties in favor of this new and more liquid asset class instead. In a sense, this is somehow comparable to the dramatic rise in stock allocations for the average household portfolio, which gradually increased between the early 20th century and the 80s, to then become a must-have for anyone’s investment strategy.
The market capitalization of real estate is approximately $300T, while Bitcoin and cryptocurrencies currently account for $2.3T, or less than 1% of the total real estate market. Looking at the historical trend, it could potentially take less than a few decades for Bitcoin to reach 50%.
It’s possible to imagine a future where stalwart assets like gold are entirely replaced by new stores of value, but will they also be able to replace the highly financialized real estate market as we know it? This leaves us with the question of whether Bitcoin could not only help Millennials achieve their dream of home ownership, but perhaps even replace it.
All opinions expressed by the writers are solely their current opinions and do not reflect the views of FinancialColumnist.com, TET Events.
