According to a recent report released by a Crescat Capital analyst, it could be a good time to invest in Bitcoin (BTC) and gold.
The analyst considers that the best strategy to follow when the yield curve first inverts by more than 70% is to buy gold and sell stocks for the next two years. The report also explains Bitcoin could also be useful to hedge against a crisis.
Bitcoin and Gold Could Be Useful In Case of a Crisis
According to the report, the gold-to-S&P 500 ratio has almost doubled on average during all the five cases since 1970.
The analyst explains that precious metals are their preferred hedge against fiat money printing and over-valued financial assets. At the same time, Crescat explains that cryptocurrencies provide an additional outlet for investors to move away from fiat currencies.
On the matter, they explained:
“We believe a small position in Bitcoin could provide diversification and hedging with significant upside, but we do not advocate for more than one or two percent of a portfolio at this time given its high risk.”
The report explains that as the first mover, Bitcoin has a network-effect advantage over other cryptocurrencies. According to data provided by CoinMarketCap, there are over 4000 cryptocurrencies and tokens in the market that were released by projects and companies in different countries.
As per the report, another positive thing to take into account about Bitcoin is the fact that cryptocurrencies, including Bitcoin, provide a functional and disruptive means of sending and receiving money in authoritarian countries.
Venezuela is an example of how cryptocurrencies could be useful for users. Many individuals were sending funds from other countries to Venezuela to help their families using Bitcoin and other cryptocurrencies rather than fiat.
In addition to it, Bitcoin is limited in supply, like precious metals. This could also play an important role in helping users avoid inflation in long periods of time.
There are only 21 million Bitcoins that would ever be mined and many of them are lost, which makes Bitcoin scarcity even a more important feature of this cryptocurrency.
Despite these positive things, Bitcoin remains a very volatile asset. Larger investors may not like to increase their portfolio volatility during a period of a financial crisis. This should certainly be taken into consideration at the time of investing in Bitcoin and other crypto-assets available in the market.