September 23, 2023

Are digital assets in the pandemic era an “airbag” for investors?

Are digital assets in the pandemic era an “airbag” for investors?

In a period of general downturn, investors are looking for the bestways to save the value of your assets. One of the areas of diversification is the cryptocurrency sector. However, how well can digital assets save capital in this situation? We asked the analyst of the financial company 8848 Invest Alexander Kopytov about this.

Colossal Impact on the World Economy

According to the expert, the current situation is very interesting from the point of view of market dynamics, since a lot of events occur in a unit of time. Investor not only have to monitor the spread of the virus, but also to study which sectors of the economy are in decline. In parallel, against this background, market volatility has also seriously increased.

At the same time, most participants in the classic and cryptocurrency believe in the speedy recovery of all chains and, accordingly, the V-shaped recovery of the economy.

In terms of the spread of the virus, now weWe see a repetition of the Chinese scenario in many countries. For example, Italy has already reached a horizontal line and further decline will go, and the United States is approaching a peak. However, then the secondary multiplier effect will come: first, the closed bookstore suffers, the next stage is the publisher, and then the authors with translators. It is quite difficult to evaluate it, so the markets are now "jumping" trying to include future changes in current quotes.

Alexander Kopytov believes that the subsequent effect will be not only in a series of bankruptcies, but also in the redistribution of many markets:

“Most likely, over the next few years we will see changes comparable to the consequences of World War II. Then, recall, the IMF and the UN appeared, and the US dollar became the reserve currency. ”

Global cleaning

Currently, a lot of distortion is appearing,that have accumulated over decades, such as bloated stock markets. Since the peak of 2008, the S&P index has grown by 100%, while the US economy has added 20% since then. The current fall returned prices only to the levels of 2017.

The same goes for real estate markets. An average apartment in London in 2000 cost £ 140 thousand, at the peak of 2008, £ 300 thousand, and now it’s £ 500 thousand. A similar picture is with real estate in China or America. The blame for the huge printing press initiated by the US Federal Reserve.

This also applies to the corporate sector - manycompanies were engaged in "eating up" the capital of shareholders or seizing market share, without even thinking about generating profit. Now everything will fall into place, only first you have to go through a crisis, which will become a means of getting rid of unnecessary participants in the economy.

Are digital assets in the pandemic era an “airbag” for investors?

New order

The world economy will have a redistribution of spheres of influence, the organization of new alliances and blocs. It is even possible to change the leaders of the global economy. China was the first to emerge from the epidemic and is already starting production.

An equally important issue is inflation. There is no consensus on further monetary measures. However, a new portion of liquidity from the Federal Reserve in the amount of $ 2 trillion was thrown onto the market at a speed 47 times faster than previous QEs. This can cause dollar inflation, which the world has long forgotten, accelerating it to a double-digit order.

And now it's time to think about what will happenan alternative in such a situation? We do not know what will become the new engine of the world economy and the key parameter of the coming technological revolution. It can be advanced pharmaceuticals, drones, artificial intelligence, the Internet of things, or something else. One thing is clear, the future economy may have new growth centers, regulators, and even a reserve currency.

It is very likely that the market will expand adoptiona progressive tool - cryptocurrencies, incorporating them into the new world order. It will be quite difficult for an investor to choose a specific currency. It is likely that these will be new digital assets developed jointly with major financial institutions. Although the current projects in the person of TON and Libra can also work.

As for the current situation and the nearestfuture, then most investors consider a quick recovery as the basic scenario and are ready to buy almost everything. Stocks, commodity instruments, as well as cryptocurrencies are now confidently rising from the current minimum values. The depth of the fall of most digital assets is comparable to other markets - about 50%. Therefore, the potential profit of a patient investor can be 100%. The only question is how long it takes.