Part 4 of Hedging the inflation crash series. After reading the past 3 posts, you might not prefer any of the aforementioned methods. Perhaps you are awaiting the correction to buy more at the dip and prefer to refrain from entering the stock market at the current moment. Without a doubt there is one more way to utilise your money rather than putting it in a “high” yield savings account. And that is the new field called Cryptocurrency.
Crypto has been around for quite a while but has only recently gain traction due to the massive surge in market cap of both bitcoin and ethereum. With the recent rollout of Bitcoin's legal tender in El Savador, albeit troubled, we know that Bitcoin has gained sufficient traction for its permanent stay here in society. With the recent tumble in the price of cryptocurrency, it is a great time to enter into the crypto world. Cryptocurrency has massive risks so only invest what you can afford to lose. However, the upsides for crypto are immense which explains the recent explosions of crypto millionaires.
I will share a few reasons why i believe that crypto can be a hedge against inflation crash.
Firstly, it is isolated and has little to no dependency on the stock market. Unlike oil $Exxon Mobil(XOM)$or Gold $Barrick Gold Corp(GOLD)$, the prices of cryptocurrency is not heavily correlated with the market conditions and is only affected by the supply and demand in the crypto market. The happenings in the stock market will not result in great impact in the crypto ecosystem.
Secondly, cryptocurrencies and especially Ethereum has practical usages. Ethereum can be used for transactions and even allow applications to be built on top of it. The blockchain technology is currently still under massive transformation and the end product looks very exciting for the whole of crypto world. When these transformations grow and develop, you can be sure that cryptocurrency will become the new norm. $Grayscale Ethereum Trust (ETH)(ETHE)$
In conclusion, crypto can be another way to diversify your investment and hedge against massive corrections in the stock market. However there are huge risks and with it comes significant and perhaps life changing rewards. Do your research, find your conviction and invest safely.
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