The Corona crisis has brought the financial markets to a collapse. Even the central banks' countermeasures with gigantic rescue packages are not succeeding in calming the markets. No matter whether equities, bonds or oil: all major asset classes are on the decline.
Investors are therefore asking themselves more than ever how they can both avoid major losses and take advantage of the opportunities that every crisis presents for themselves and their portfolios.
Where will the returns come from in the future?
Bonds are unprofitable, real estate is overvalued in many places and the risk on stock markets is currently unpredictable. Many investors understandably cling to gold as the last refuge of stability. As rational as this reaction may seem, many forget that the price of gold has been rising for a long time. Even before the Corona crisis, the economic uncertainty of many investors caused gold prices to climb. Even central banks have increasingly stocked up on gold in recent years. The consequence: the gold price is no longer far from its all-time high.
One alternative, which is less highly valued and can offer investors protection against currency devaluation through expansive central bank measures, is digital gold. We are talking about Bitcoin, which is more strongly decoupled from traditional financial investments than any other asset. In addition: Unlike analog gold, the price potential of digital gold is much higher.
Why crypto currencies promise security even in a crisis
Now one may object that the crypto-market has also fallen sharply during the Corona Crash. One could interpret that Bitcoin, for example, is not a so-called safe haven after all. However, this view is somewhat short-sighted.
The explanation is simple. The market is currently in a massive liquidity crisis. Everything that can be made money in the short term is being sold. Since crypto-currencies can be traded very easily at any time, it hits Bitcoin and Co. just like all other assets. Gold has also fallen significantly, although it is considered a crisis metal. As soon as the selling panic is over, however, investors will again look for fundamentally well valued assets that offer high returns. This is exactly where the crypto-market comes back into play.
Inflation protection and upside potential in one
The great strength of crypto currencies is that they cannot be devalued by an expansive central bank policy. Also, the crypto market hardly correlates with traditional asset classes. This independence makes crypto currencies so attractive for any diversified portfolio. In particular, investors who are not only interested in one crypto currency but in a wider selection can combine security and return well.
Also playing into the hands of the crypto-currency market is the fact that there are still comparatively few investors who hold Bitcoin and Co. in their portfolio. Due to the further establishment of the block chain technology in our company, greater catch-up effects among investors can be expected here.
Keeping calm pays off
The coronavirus puts people and the economy in an extreme situation. Nobody can foresee how much more the financial markets will be affected. In the short term, therefore, the crypto-market can also be affected by sales panic. One must understand: The fundamental value of Bitcoin and the block chain technology even benefits from the crisis.
The value proposition of digital and decentralized infrastructures increases significantly due to the crisis. We can currently witness the emergence of a new awareness of value creation in the digital space. The key technology for digital value transactions is block chain technology. Hardly any other technology will be able to profit as much from the crisis as Bitcoin and other crypto currencies.
IVO-Bond: positive return despite corona crash
Whether Bitcoin will be the big winner among all the digital assets remains to be seen. There are almost 3,000 blockchain assets on the market and only a few of them will prove to be good investments.
INVAO therefore focuses on diversification. The successful investment house with crypto expertise avoids the concentration risks of standalone investments and instead invests in a widely diversified portfolio.
Anyone who thinks they are simply putting Bitcoin into their portfolio and waiting for the big bang should take a look at the price development of the last few weeks. The INVAO portfolio has been up 1.6 percent since the beginning of the month, beating ALL other asset classes, including Bitcoin, by far. So money is earned today.