My investing muse - Cryptocurrencies as an inflation hedge? (01 Feb 2022)

 I am not sure if crypto can remain a strong hedge against inflation with such volatility. 

inflation has reached 7% but the volatility swing is way bigger (with some values halved). this implies that the market is nervy, uncertain how crypto will manage in lieu of the rising interest rates. Those using leverage to invest, they maybe forced to stop loss with rising inflation, interest rates and the high volatility of the swing. with a 50% drop of the value from recent highs, it may not be sustainable to hold on. 

this may lead to capital reallocation to more traditional assets like bonds, equities & real estate.

millionaires have been made through crypto and there are great losses as well. personally, it is hard to treat this as a hedge from such swings in crypto value. as a hedge, it must at least have some capital preservation. it is definitely speculative not preserving. 

in the days to come, there will be crypto millionaires. in the absence of proper governance and legal framework, investors may find it difficult to address concerns or issues they face. this is most worrying. 

thus, I have remained on the sidelines to watch and monitor. if crypto proves to be resilient amidst the interest rates hikes, there would be more chance to consider adding this asset class to our portfolios.

please research before investing. here is wishing all a most prosperous year of the Tiger.