My Investing Muse

Bitcoin $BTC has been touted as the next hedge or "digital gold".  Traditionally, gold has been the "go-to" asset that holds value over long periods and is used to hedge against market downturns .   Thus, one of the key qualities of a hedge is that of value preservation .  During the market's downturn, a hedge will need to be able to retain or increase its value against market correction or  recession. Extract from investing.com:  Gold historically performs well during market corrections because it maintains its value; its price holds somewhat steady, then tends to rise as investors move from stocks to gold if a recession is threatening. This makes it useful as a hedge—an investment that moves opposite another—against market corrections or recessions. Comparison of BTC, gold and S&P500 index To establish if BTC is a good hedge as "digital gold", it needs to display similar performance and trends like that of gold.  Let us look into the following ch...

  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...