Why the crypto crash won't slow down the global economy
Crypto-currencies have had a topsy-turvy 2022. One of the biggest reasons people have been investing in cryptocurrencies was their appeal of being a stable yet highly profitable investment. Many investors hoped that crypto would fly high even during the impending recession.
However, its recent crash indicated strong correlations with the financial markets.
Moreover, the geopolitical turmoil such as the Ukraine war has also led many investors to seek haven in low-risk investments such as gold bonds. Given the unstable environment in the financial markets, many crypto investors started selling their digital assets leading to a bloodbath in the crypto market.
Why the crash is unlikely to hurt the global economy
Crypto assets have lost more than $1 trillion in market value as investors flee the risk assets. Investors from the US have lost $300 billion in the crypto carnage in the last six months. A huge slowdown in the US economy that would eventually engulf the global markets was being speculated due to such major losses. However, Goldman Sach’s chief economist Jan Hatzius says this is far from the real situation.
Crypto losses make up only 0.3% of the total household wealth in the USA. Not only does it occupy a tiny portion of the wealth, but the investors who chose crypto are also an incredibly small number. Most crypto investors are not investors; they are gamblers, according to Hatzius.
As the crash does not affect many investors, its effect on the global economy is mild, if not absent.
Safer alternatives to cryptocurrency
Individual stocks and dividend stocks
While believing that inflation and recession-safe stocks exist is hard, they still exist. If you are an investor, willing to track and analyze the stock market and earn attractive returns just like the ones yielded by cryptocurrencies (before the crash), then individual stocks are a good option for you.
If you are looking for safer alternatives with less volatility, choose dividend stocks. In any case, if stock market analysis overwhelms you or you need some help with learning, the nitty-gritty ShiftAltCap is the place for you.
Index funds
They are constructed to match the financial market index regardless of the market condition. Hence, not only are they highly monitored, but they also provide high market exposure and reduce losses.
Index funds are an excellent option for those who want to safeguard their portfolio at any cost. Investors wanting to beat the market cycles and maintain a steady portfolio must opt for index funds.
REITs
Long-term investments are one of the most preferred ways to sit through the recession and make the most of market bounce-backs once the economy starts recovering. For investors who want to adopt this strategy, REITs are your best option.
REITs are investments in income-generating real estate stocks. They are affordable and offer instant liquidity, making them a safer and more profitable option for any kind of investor.
Struggling to understand the market or invest in businesses of tomorrow? You need an expert-managed portfolio with ease of investing and insurance protection. Choose ShiftAltCap’s pre-built portfolios that are curated to deal with market headwinds. Our global diversification strategies deliver up to 30% YoY and offer true diversification.
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References:
https://decrypt.co/101019/crypto-crash-us-economy-goldman-sachs
https://www.bankrate.com/investing/bitcoin-and-crypto-crash-what-investors-should-do/