Bitcoin & Co.: Safe Haven in Times of Crisis
Leading economists predict a global recession in 2020. As a result, the U.S. dollar, the euro, and other major fiat currencies will likely lose in value. Investors can protect their holdings by investing in digital currencies like Bitcoin, Ether, and Ripple.
2020 is approaching with big steps. According to leading economists, turbulent financial markets are ahead. Nouriel Roubini, professor of economics and a well-respected investment guru, believes a global recession is inevitable. The U.S. trade war with China and the global refugee crisis will affect trade and supply chains – and the banking system has not even recovered from the previous crisis. The impact of the upcoming recession will go far beyond the U.S.
“Outside the US, the fragility of growth in debt-ridden China and some other emerging markets remains a problem, as do the economic, political, and financial risks in Europe. Worse, in the developed world, policy instruments for responding to a crisis remain limited. The monetary and fiscal interventions used after the 2008 financial crisis cannot be used today with the same effect,” says Roubini.
Long story short: Investors need to find ways to protect their assets from a downturn in international financial markets.
Recession-hedging with blockchain assets
Historically, gold has been the number one asset people buy when they fear a recession. During both, the dotcom crash in 2000 and the financial crisis in 2008, gold staged an impressive 25%+ rally while the S&P 500 was down more than 20%. Gold, or precious metals in general, should therefore be part of every crisis portfolio.
The reason why investors park their assets in gold when trouble is insight is that gold has a low correlation to other asset classes. The same is true for Bitcoin and other cryptocurrencies. They are non-correlated to traditional asset classes such as stocks, bonds, or real estate, which means they are not affected by a global stock market meltdown. Bitcoin is even slightly negatively correlated to gold, making it an excellent portfolio addition in times of crisis.
Additionally, politically motivated institutions cannot manipulate Bitcoin prices through the means of monetary policy interventions, which makes Bitcoin & Co. even more attractive as a crisis hedge. It’s not without reason that Apple co-founder Steve Wozniak has described Bitcoin as digital gold.
AI-supported trading: because emotions are a lousy advisor
To build up a crisis-proof portfolio, investors need to diversify their assets and keep an eye on market movements. Especially in still-nascent crypto-markets, where changes happen quickly, investors need to be able to reshuffle their portfolio assets rapidly. But monitoring a thriving market with thousands of Bitcoin derivatives is a full-time job.
As most investors do neither have the time nor the technical expertise to keep up with quickly-changing crypto markets and adjust their portfolios, INVAO Group offers the IVO Blockchain Diversified Bond. IVO’s underlying portfolio is actively managed and consists of carefully selected blockchain assets that offer maximum crisis protection.
Additionally, INVAO’s trading software is powered by artificial intelligence, which offers protection from irrational trading emotions such as FUD (Fear, Uncertainty, and Doubt) and FOMO (Fear of Missing Out). No matter how worrisome the economic situation, emotions are a terrible advisor when trading Bitcoin & Co.