Today cryptocurrencies like Bitcoin, Ether, and BNB are already considered an alternative store of value, and it’s no wonder that some companies and high-net-worth individuals around the world are turning to them as a way to diversify their capital. Even many Brazilians have found in these digital currencies a way to get around inflation.
In Brazil, this subject is particularly relevant, because due to several factors many economists predict that inflation in 2021 will reach almost 5%, well above the 3.75% target that the government had set for the period.
This alone is more than enough reason to raise the red alert, even more so in view of the devaluation of the Real in the international scenario. There is a risk of getting into a situation similar to that of Argentina. The neighboring country suffers from its weak currency as products keep getting more expensive while the purchasing power of the population drops.
Cryptocurrencies as a potentially lucrative investment
More than just stores of value, the major cryptocurrencies can also be an excellent medium to long-term investment. To understand this, we need only look at the appreciation of Bitcoin and ETH (a cryptocurrency developed by Ethereum) in the last year.
In the case of the former, the appreciation in this period is close to the incredible 677%, i.e., if a Brazilian had invested 5,000 reals in Bitcoin a year ago, through Binance for example, today his capital would be almost R$34,000.00. But for those who bought ETH, the appreciation has been even more incredible, about 1,239%! If we compare it with the yields of traditional investments such as direct treasuries and real estate funds, it is clear that none of them could yield a fraction of these values.
It is worth remembering that all these calculations were made based on the price of Bitcoin and ETH on 4/26/2021. It is important to point this out because cryptocurrencies are extremely volatile, changing daily, so buying these assets is considered a high-risk investment. Therefore, as wonderful as it sounds, it is never recommended that you invest all your capital in cryptocurrencies.
As with all variable income investments, there is the possibility that a cryptocurrency will depreciate in value and result in some loss. So the old investment maxim still holds true here, never put all your eggs in one basket.
Even knowing the risks, it is hard not to consider cryptocurrencies as a tool against inflation. If you leave your money in savings, it is certain that you will lose purchasing power in the short, medium, and maybe even in the long term. If you do decide to invest some of your capital in crypto, we can suggest that you consider Binance for this task as this is simply the largest and one of the fastest cryptocurrency exchanges in the world.
Nothing on this website should be perceived as financial, investment or trading advice. We urge you to do your own research prior to investing and we highly recommend that you consult a certified financial advisor.
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