Inflation is causing stress and worry around the globe. Residents of Turkey, Argentina, Venezuela and dozens of other countries have seen prices jump by hundreds of percent in recent years. And this is becoming a larger problem in developed countries as well.
According to experts at Goldman Sachs, U.K. inflation could hit as high as 22% in the coming period. The European Union also faces sharp price rises. And in the U.S., inflation figures reported this week caused the stock market to record its worst day since 2020.
How do people protect their money during inflationary periods? The common advice is to invest in hard assets like real estate, commodities or precious metals (for those who can afford it).
But what about cryptocurrency? That could be a very good option; by its very nature, cryptocurrencies are protected from fiat currency inflation, so money put into them will be protected from rising rates of inflation.
But that is not the end of the story. Despite crypto being protected from inflation, its value still changes, depreciating or appreciating just like other investment vehicles. In fact, the crypto market is extremely volatile right now. That's exactly why right now — if it's done right with the help of advanced tech and other approaches — crypto trading can offer opportunities for appreciation, given the current market fluctuations.
As a result, crypto can not only protect money against inflation but perhaps also even increase wealth at a time when traditional markets are sluggish. In fact, the growing and increasingly valuable role that crypto is playing in the financial trading world was made more clear this week when legacy brokerages Schwab, Fidelity and other Wall Street firms announced the creation of a new crypto exchange.
Crypto, in short, offers investors singular opportunities, given the state of the economy right now. Many investors normally shy away from volatility; they want to be able to control their investments and rationally predict where their money will be at various points in the future. But volatility that allows investors to capitalize on quick sharp market swings does have a role in investments — especially during periods of inflation.
When inflation is high, formerly profitable blue-chip investments — like stocks in big companies — generally provide lower yields, as their share prices and/or dividends can't keep up with inflation. Indeed, stocks are not performing well now during the current bout of inflation, as Feds and Exchequers around the world pump up interest rates in order to tamp down demand and prices. And when investors are unable to find profitable vehicles for their money, they tend to gravitate to volatile investments, according to investment experts.
This is where cryptocurrency can play an important role in an investment portfolio. There are few investments more volatile than crypto. But if investors are able to properly time the crypto market — using advanced AI services to predict the likely movement of various currencies during volatile periods or algorithmic trading tools that are able to pick up immediately on market trends and take advantage of them — they could find that their money keeps up with inflation, and then some.
In fact, some experts believe that the crypto market makes for a better volatility investment than many of the other options available — like precious metals. One advantage of the crypto market is its variety; there are numerous well-established currencies at various price levels, so when the price of BTC falls, 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 doing either requires research and intelligence. Studying the crypto market, as well as utilizing advanced AI-based prediction and trading tools could help investors make the most of their crypto investments.
That inflation is here to stay — at least for now — is clear. The question for investors is what to do about it, and investments in vehicles that appeared to be too volatile in the past could be the answer.
Holding crypto will protect money from inflation, although it is still subject to price fluctuations. But trading crypto, with the right tools that capitalize on current volatility, could grow money, too. That makes it an even more powerful asset class in this challenging and uncertain economic time.
(Dmitry Gooshchin is the chief operating officer and co-founder of EndoTech, an AI trading platform.)