Spotting opportunity in the midst of chaos

There is no doubt that we are living in unprecedented times. With inflation and global conflict seemingly becoming a part of daily life, many investors are wondering how various asset classes will fare in the coming months and years.

While we have all become acutely aware of the current economic conditions around the world, we must remember that there is always opportunity in times of uncertainty… you just have to know where to look.

The Reality: inflation isn’t going down any time soon

Over the past 2 years, central banks kept interest rates too low for too long, allowing increased liquidity into the market through buying bonds. This effectively bloated their balance sheets in an attempt to stimulate the economy.

Despite the short-term relief, the added liquidity came at a price. A rise in the costs of everyday goods and services signalled the arrival of inflation.

Due to inflation’s lagging nature, it wasn’t until 2022, when countries began to record record-high inflation prints, that central banks began increasing interest rates to cool down the economy. The steep increases in global interest rates meant neither crypto, stocks, nor the bond market provided safety to investors.

Considering how long it might take countries to reach their inflation targets again, many investors believe markets will need to digest many more rate increases.

But understanding this presents the opportunity to position yourself correctly.

The Opportunity: Regardless of interest rates, crypto will move independently of other assets.

“In The Midst Of Chaos, There Is Opportunity” — Sun Tzu

In an era when interest rates may go higher, it’s common to ask what elevated rates mean for stocks, bonds, and crypto.

While crypto moves as a function of the market, there are two main reasons why it is likely to go its own way, breaking away from its recent correlations with other investments.

1) High interest rates don’t directly affect the value of crypto as they do for stocks and bonds.

Interest rates directly impact stock and bond prices in today’s world. This is because analysts typically value stocks and bonds based on their future earnings potential discounted to today. When interest rates rise, so does the discount rate, and hence analysts reduce the current value of future stock earnings or bond interest payments.

Since these analysts see the current values of stocks and bonds being lower, they sell them, which drives down their prices until they become more in line with those values.

Analysts have yet to value cryptocurrency in this manner, so interest rates have no direct impact on their valuation.

2) Cryptocurrencies will trade based on their own fundamentals and levels of adoption.

Adoption plays a pivotal role in growth. When technology is adopted fast enough, external macroeconomic forces have a difficult time having a significant negative impact on it. In the same way that Apple and Amazon went on to produce multi-decade growth regardless of market conditions, cryptocurrencies could do the same.

As it stands, cryptocurrencies are the fastest adopted technology in human history, a mantel previously held by the Internet and correlations to other asset classes are already starting to lower — moving ever closer to a completely independent asset class.

The Playbook: How do you pick a winner in a market with over 20 000 cryptocurrencies?

Similarly to how the Internet boom brought hundreds of new technology start-ups to the stock market, the emergence of Bitcoin has resulted in thousands of new alternative cryptocurrencies occupying the crypto market.

With over 20 000 cryptocurrencies available, you have to ask yourself, why search for the needle in the haystack when you can just buy the haystack?

Bitcoin is the leading cryptocurrency by market capitalisation, but it is also progressively losing market share dominance to alternative projects. The chart below is called the Bitcoin dominance chart, and it shows how the market capitalisation of Bitcoin relative to the rest of the crypto market is decreasing over time.

Bitcoin represented more than 90% of the market capitalisation of cryptocurrencies in February 2017. Its present market share of just 40.37% in the cryptocurrency space shows how rapidly the asset class has developed as a result of the appearance of countless additional cryptocurrencies.

As cryptocurrencies continue to expand as an emerging asset class, other cryptocurrencies may outperform Bitcoin. These assets are important to take into account because they could significantly increase the value of your investment portfolio.

For instance, the graph below compares the performance of a $100 standalone investment in Bitcoin to the Revix Top 10 Bundle as of January 1, 2016. The $100 investment is spread across the top 10 cryptocurrencies by market capitalisation thanks to the Revix Top 10 Bundle.

From January 1, 2016, to October 31, 2022, a $100 standalone investment in Bitcoin would have been worth $4 988.57, but a $100 investment in the Revix Top 10 Bundle would have been worth $10 460.73.

The Revix Top 10 Bundle generated a return of 209.69% more than owning Bitcoin alone. This

shows how effective diversification can be for your increasing the profitability of your investment portfolio.

The execution: Buy when no one else wants to.

“Buy when there’s blood in the streets, even if the blood is your own.” — Baron Rothschild.

While making investments during periods of extreme uncertainty is challenging, these are frequently the best times to do so.

The Bitcoin Rainbow chart below shows this exact opportunity.

The chart overlays rainbow colour bands on top of the logarithmic Bitcoin chart to illustrate market sentiment and potential buy or sell opportunities. The data shows that Bitcoin is currently in “Fire Sale” region, which frequently signifies market bottoms or close to it.

At these price points, investing in the cryptocurrency market is a rare opportunity that might result in significant returns.

Investing in cryptocurrencies is simple with Revix, a wealth creation company based in Cape Town. Their cryptocurrency bundles let you invest in various top assets without signing up for numerous exchanges and actively managing a portfolio.

Along with the Revix Top 10 bundle, Revix also sells a Defi Bundle, another popular diversified investment product.

The Revix Defi Bundle holds the top 10 Decentralised Finance (DeFi) focused cryptocurrencies that revolutionise the financial system using smart contracts and blockchain technology.

These Bundles will allow you to diversify your investment portfolio in minutes.

Revix brings simplicity, trust and excellent customer service to investing in cryptocurrencies. Its easy-to-use online platform enables you to securely own the world’s top crypto assets in just a few clicks.

Invest in Revix Bundles and standalone crypto investments here and start your journey with as little as R150.