Crypto’s Entry Into Chile’s RE Sector Pleases Investors

Despite its current volatility, real estate deals in cryptocurrency are emerging as an option in the country

Investors are enthused about the entry of cryptocurrencies into Chile's real estate sector.
March 07, 2022 | 12:41 PM
Reading time: 2 min.

Santiago — The purchase of a plot of land in Temuco, in southern Chile, with Bitcoin, Ether and Dogecoin enthused investors recently, in a transaction that was launched in November and closed in February, the first acquisition in Chile’s real estate sector using cryptocurrencies.

But real estate is not the only sector in which deals with crypto are being considered. Cristóbal Pereira, CEO of LatAmTech Finance, says that options are also being explored in the construction sector, although so far without results, while some companies are offering products and services using this form of payment.

“We are not only seeing how these cryptocurrencies are becoming a means of investment, but that they can be used as one more method of payment,” Pereira told Bloomberg Línea.

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CEO LatAmTech Finance. Photo: Courtesy of LatAmTech Financedfd

But is payment in crypto a good idea in the real estate sector? Pereira says that it depends on the strategy of the companies that venture into such operations, as well as the context in which it takes place.

We all know that cryptocurrencies are highly volatile,” he says .

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Thus, companies that only intend to receive cryptocurrencies to sell automatically at the value of Chilean pesos, would only be accepting the virtual asset as a means of payment, while another option would be to receive them and keep them as assets. “It must be taken into account that Bitcoin in the long term is an asset that has shown an increase in its price, at least over a four-year term. Companies that have enough cash to operate on a day-to-day basis and can keep Bitcoin in reserve, could do so without major problems”.

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A Safe Haven Asset?

However, cryptocurrencies are currently losing strength as a safe haven of value in the face of the high global market volatility due to the war in Ukraine, and which could impact the interest of some investors, Pereira says. “It is important to emphasize that Bitcoin and cryptocurrencies are assets that appreciate in the long term, which is not enough for it to become a safe haven asset, given that in the short term they are subject to shocks that strongly impact their value”.

What Bitcoin would need in order to become a safe haven option again would be, first of all, to reach a capitalization such as that of gold, with a value close to $13 trillion, and which translates into its value growing by at least $500,000 in order to have enough liquidity to withstand market “shocks”.

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