Cryptocurrencies in times of financial instability

Cryptocurrencies in times of financial instability

By beachbummer | CryptoBeach | 18 Aug 2019


We are living in uncertain times caused by various events happening around the world. Protests by a third of a country's populace, hyperinflation, imposition of tariffs for global trade are just some of the recent events.

Cryptocurrencies have been said in the same breath with Gold as a safe haven to escape away from the chaos, but is it truly?

To a large extent, it is dependent on the scope of the event that you are facing. If it is a localised event such as inflation in Argentina, Iran and Zimbabwe, then it possible to use cryptocurrencies as a store of value for a local currency that is being rapidly devalued. However, depending on the options available to you, you can also choose to invest in other instruments like foreign stocks and foreign currencies. The advantage of using cryptocurrencies is that it is possible to hide your activities through the use of VPNs and decentralised exchanges.

A problem arises when the uncertainty event is not localised and has a larger scope, such as the ongoing trade war between the USA and China, or Brexit. It would then be more difficult to decide on a cryptocurrency to utilise. For instance, using a USD-based stablecoin may not be a wise choice if you are trying to hedge against a devaluation of the USD, similarly you may also not want to use a GBP-based stablecoin if you are trying to protect yourself against Brexit.

Listed below are some possible selections based on various factors, but as usual, please do your own research and decide what is best for yourself.

  • BTC - Suitable for short term events only due to high volatility
  • USDC - Suitable for all short-term and long-term events not tied to the US
  • BNB - Possible option for medium-term use as it is supported by the largest crypto exchange and has price support due to the quarterly coin burn.

Please contribute to the comments below if you believe there are other options available.

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beachbummer
beachbummer

Professional in Financial Services


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