Inflation causes stress and worry around the world. Residents Turkey, Argentina, Venezuela and dozens of other countries prices have jumped by hundreds of percent in recent years. And this is becoming an increasing problem in developed countries as well.
According to Goldman Sachs experts, inflation in Great Britain could reached as much as 22% in the following period. The European Union also faces a sharp rise in prices. And in the US, inflation data released this week sent the stock market to its worst day since 2020.
How do people protect their money during periods of inflation? The usual advice is to invest in hard assets such as real estate, commodities or precious metals (for those who can afford it).
But what about cryptocurrencies? That could be a very good option; by their very nature, cryptocurrencies are hedged against fiat currency inflation, so money invested in them will be protected from rising inflation rates.
But that’s not the end of the story. Despite being hedged against inflation, cryptocurrency still fluctuates in value, depreciating or appreciating like other investments. In fact, the crypto market is extremely volatile right now. That’s why right now – if done right with the help of advanced technology and other approaches – cryptocurrency trading can offer opportunities to increase value, given the current fluctuations in the market.
As a result, crypto can not only protect money from inflation, but perhaps even increase wealth at a time when traditional markets are slow. In fact, the growing and increasingly valuable role that crypto plays in the world of financial trading became clearer this week when legacy brokerages Schwab, Fidelity and other Wall Street firms announced the creation of new crypto exchange.
In short, crypto offers investors unique opportunities, given the current state of the economy. Many investors tend to avoid volatility; they want to be able to control their investments and rationally predict where their money will be at different points in the future. But volatility which allows investors to capitalize on rapid sharp changes in the market has a role in investments – especially during periods of inflation.
When inflation is high, previously profitable blue-chip investments — like stocks in big companies — generally they give lower yields, because their stock prices and/or dividends cannot keep up with inflation. Indeed, stocks are not doing well right now during the current bout of inflation, as are the feds and treasuries around the world raise interest rates to reduce demand and prices. And when investors are unable to find profitable vehicles for their money, they tend to gravitate toward volatile investments, according to investment experts.
This is where cryptocurrency can play an important role in an investment portfolio. Few investments are more volatile than cryptocurrencies. But if investors are able to time the cryptocurrency market correctly—using advanced artificial intelligence services to predict the likely movement of various currencies during volatile periods, or algorithmic trading tools that are able to spot market trends immediately and capitalize on them—they could find that their money keeps up with inflation, and then some.
In fact, some experts believe that the crypto market constitutes a better investments in volatility than the many other options available — like precious metals. One of the strengths of the crypto market is its diversity; there are numerous well-established currencies at different price levels, so when Price BTC is falling, the price of ETH or EOS could rise.
The key to figuring out which currency to invest in, when to buy and when to sell, and how long to wait before you do, requires research and intelligence. Studying the crypto market, as well as using advanced AI-based forecasting and trading tools, could help investors make the most of their crypto investments.
That inflation is here to stay — at least for now — it’s clear. The question for investors is what to do about it, and investing in vehicles that have seemed too volatile in the past could be the answer.
Holding cryptocurrencies will protect money from inflation, although it is still subject to price fluctuations. But trading cryptocurrencies, with the right tools that capitalize on current volatility, could also make money. This makes it an even more powerful asset class in these challenging and uncertain economic times.
(Dmitry Gooshchin is the COO and co-founder of EndoTech, an AI trading platform.)