The worst fall in the last half-century saw the markets (big losses and rising interest rates) in the first half of 2022, according to the popular cryptocurrency analyst Invest Answers, whose YouTube channel has 442,000 subscribers.
“I was alone in that, but I’m starting to see people turn it around and start to see the numbers we’ve been seeing for a long time. First of all, the economy has crashed, despite reports that GDP is strong. No it isn’t. All the markets have crashed. It’s the worst drop in 50 years this first six months of this year. Consumer confidence is at a record low…
The Fed funds rate was less than 1% last year and is now targeting 3.8% in early 2023. That’s a quadrupling in interest rates. We are in a full-blown recession. No ifs and no ifs and no buts about it.”
Even worse than 2018
The analyst adds that the current situation is much worse than the 2018 stock market crash because the US added $9 trillion worth of debt in about four years:
“We have an empire built on debt that cannot manage interest rates above 3.2%. It simply cannot and let me explain why in simple numbers. The Fed’s maximum funds rate was 3.2% in 2018 and the markets collapsed with $9 trillion less debt than they have now.
That was only four or five years ago. So they can’t raise interest rates in a recession. That’s my simple view and I would bet on it.”
The dollar and the euro
Turning his attention to safe-haven investments, the InvestAnswers host notes that in the wake of both economic and political crises affecting European currencies, the strength of the US Dollar Index (DXY) has held up surprisingly well and even outperformed the Swiss Franc over the past six months:
“There is nothing but destruction and gloom everywhere, but there is light at the end of the tunnel. According to what we’re seeing on DXY, it looks like it’s being overcome. This shot up to almost 108 and came back down again. This type of formation tells us that it could be out of danger. I think the time to hedge was earlier this year. Earlier I had a question about the euro versus the Swiss franc and I said the Swiss franc was safer. As it turns out, the dollar would have performed a little bit better by about 2% or 3% in that time frame. But nobody expected the euro to collapse that much.”
Bitcoin as a hedge
The analyst concludes that people still have time to acquire hard assets, such as Bitcoin (BTC), instead of fiat currencies, as part of a strategy to offset future losses in their investment portfolios.
“The bright spot is getting hard assets. Think about Bitcoin. That’s how you’re hedging your portfolio right now. This will maintain your buying power despite the fact that it is still considered a high-risk asset and still falling like all other assets. Bitcoin is probably the safest bet. Stay away from fiat currencies. They all have problems.”
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