[SPONSORED] Why search for that needle in the haystack when you can buy the whole haystack? RevixInvest Moneyweb crypto economy
CIARAN RYAN: Can cryptocurrencies be used to protect your wealth in a weakening economy? Cryptos are generally perceived as high risk – and with good reason. We’ve seen the kind of volatility associated with crypto assets like Bitcoin and Ethereum, both of which dropped more than 70% between November 2021 and last year, and that’s before rebounding sharply since the start of 2023.
South Africa is by no means perfect, and there are major risks. You’ve mentioned two of them. I think inflation is a big one, and interest rates are another. I think load shedding is a huge one, and obviously now greylisting has just popped up. These are four kinds of pillars, and they do feed into rand devaluation.
So current stock prices should be hit quite hard by these interest-rate hikes [for] South African companies. So all these factors kind of point to a future of rand devaluation, lower stock prices and sticky inflation, and I think crypto could possibly be the provider of help for that. Secondly, there are some cryptocurrencies that have extremely low inflation rates, if not [being] deflationary. Ciaran, you probably know Bitcoin and Ethereum come to mind here as two of the front runners in this space.
Bitcoin has returned on average over 160% a year, year on year, since its inception. That’s mental. Secondly, in Bitcoin’s history there is yet to be a four-year period of negative returns. There’s never been a rolling four-year period in … Bitcoin’s history of negative returns. In fact, the lowest four-year-period return it had is 144% up. That’s mental.
So from that perspective alone it’s just a diversifier, it’s a must-have in a portfolio. A smidgen or a 1% to 10% allocation would be enough. It’s such a changing environment. You might as well buy the haystack and have fun, instead of spending your time searching for that one winner.
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