In recent months, concerns around inflation have compelled financial experts and consumers alike to reach for investment opportunities that can provide some small hedge against value loss. The fear behind their search feels justified; after all, the Fed’s balance sheet has burgeoned from $900B to $9T in just over a decade. In 2020 alone, the US government created no less than $3.5T to support the economy through the Covid-19 crisis.
Some experts have posited crypto as just such a hedge, arguing that since such currencies exist independently and are designed to have a limited supply, centralized entities can’t erode asset value by “injecting” more into circulation.
How does it work?
The US Bureau of Labor Statistics just dropped a bombshell. In the last 12 months ending in January 2022, inflation rose 7.5%. That’s the highest level in the previous 40 years. But whereas in the 1980s, investors would have turned to precious metals like gold and real estate to hedge funds against inflation, crypto didn’t exist. Bitcoin has only been on the scene since 2009, but the over 12,000 tokens it’s brought are making money investors ask: is crypto a good hedge against inflation?
The reasons for asking this question are clear. If you’re not investing your money, it’s losing value as you read this article. Even gold entered 2022, making a –5% loss, which means that traditional go-to’s for investors seeking to beat inflation are not as safe as they were.
Inflation chart displaying price rise of a few items between 1960-2021 in US
Top three things to know before starting:
- Crypto can potentially be an alternative to a central bank-regulated economy.
- Crypto assets are notoriously volatile.
- Inflation pinches everyone, which begs the question as to whether the crypto investment space can be looked at as a hedge against it.
Best cryptocurrencies to hedge against inflation in 2022
Let’s take a look at the best five cryptos to invest in.
Bitcoin is the number one crypto that can be a hedge against inflation. It is the first crypto and the most valuable by a wide gap. Its complete decentralization and autonomy make it the standard for all cryptos. The total supply is also capped at 21 million tokens.
Over the years, the supply has reduced due to halving while the value keeps rising. Even though it’s also volatile, it has established some stability in the past few months. Since its supply is capped, there’s no chance of it being inflationary. There won’t be any more BTC to mine once the total supply is maxed out, likely in 2140.
Features such as autonomy, capped supply, consistently low inflation rate, market capitalization, and widespread adoption make crypto the best hedge against inflation.
Bitcoin price today is $39,642.19 with a 24-hour trading volume of $41,318,645,329. BTC price is down -2.0% in the last 24 hours. The 24-hour trading volume of Bitcoin is $41,318,645,329. It has a circulating supply of 19M coins and a total supply of 21M.
- BTC hit an all-time high of $69,044.77 on Nov 10, 2021.
- BTC had an all-time low of $67.81 on Jul 06, 2013.
Where to buy it?
Bitcoin is traded on 220 exchanges, with the top exchanges being Binance, FTX, and Crypto.com. If you want to know where to buy BTC at the current rate, the top crypto exchanges for trading are OKX, CoinTiger, Bybit, and Coinbase.
What are the perspectives of the BTC?
The most extreme crypto skeptics say Bitcoin will tank to as low as $10,000 in 2022, but a middle ground might be to tell the crypto can still climb to $100,000 like many experts predicted late last year — just on a slower timeline.
Curve DAO Token (CRV)
Curve is a stablecoin exchange, indeed with decentralized attributes. It claims to be infusing liquidity into the stablecoins market through its automated market maker feature. Stablecoins are pegged to any stable asset like the US dollar.
CRV is the native token of Curve’s decentralized autonomous organization, also dubbed DAO, an Ethereum-based connector for smart contracts built on the blockchain. It was launched in 2020 and has found a place among the top 100 crypto by market cap. As of now, it has a market cap of nearly US$2 billion.
The crypto price today is $2.52 with a 24-hour trading volume of $460,254,938. It has a circulating supply of 390 Million CRV coins and a total supply of 1.73 B. The 24-hour trading volume of CRV is $460,254,938. CRV price has been up 12.8% in the last 24 hours.
- CRV hit an all-time high of $54.01 on Aug 14, 2020.
- CRV had an all-time low of $0.331577 on Nov 05, 2020.
Where to buy it?
It is traded on 86 exchanges, with the top exchanges being Binance, FTX, and BingX.
What are the perspectives of the CRV?
According to recent long-term forecasts, the price of CRV will reach $12 by the end of 2022, rising to $22 by the end of 2023 and $35 by the end of 2025.
Decentralized blockchain-based digital platform Tron was released in 2017 by a non-profit organization. At the time of writing, Tron has a market capitalization of around $6.6 billion. It began as an ERC-20 token before migrating to its blockchain network. This is significant since it implies ETH blockchain vulnerabilities no longer influence it. Furthermore, by letting developers create smart contracts on Tron, it was given the freedom to flourish freely.
TRON price today is $0.067886096788 with a 24-hour trading volume of $1,177,469,986. TRX price is down -0.6% in the last 24 hours. It has a circulating supply of 100B TRX coins and a total supply of 102B.
- TRX hit an all-time high of $0.231673 on Jan 05, 2018.
- TRX had an all-time low of $0.001804341635 on Nov 12, 2017.
Where to buy it?
It is traded on 115 exchanges, with the top exchanges being Digifinex, OKX, and CryptoMarket.
What are the perspectives of the TRX?
With continuous improvements in the TRON network, we can say that 2022 is a good year for this crypto. For this reason, the bullish price prediction of TRON in 2022 is $0.10638. On the other hand, the bearish price prediction for 2022 is $0.05113. Its price is expected to reach $0.32 by 2023.
Although Thor is typically identified by a hammer, this crypto takes Thor to a blockchain. It enables users to trade cryptos without losing the assets’ custody. THORChain is more like Curve’s liquidity protocol in that it acts as an exchange platform. Assets owned by users can be easily swapped without order books, thereby creating liquidity. RUNE is the native token of THORChain. Network participants can use it for payment of fees.
Today’s crypto price is $8.36, with a 24-hour trading volume of $175,783,446. Its price has been down -6.2% in the last 24 hours. The 24-hour trading volume of the coin is $175,783,446. It has a circulating supply of 300M coins and a total supply of 500M.
- RUNE hit an all-time high of $20.87 on May 19, 2021.
- RUNE had an all-time low of $0.008512638584 on Sep 28, 2019.
Where to buy it?
It is traded on 33 exchanges, with the top exchanges being Binance, FTX, and Nami.Exchange.
What are the perspectives of the RUNE?
The RUNE price is expected to reach a maximum level of $13.23 at the end of 2022. Irrespective of its adoption, RUNE faced heat till January 2022. Going by our THORChain forecast, the bulls may be back; the RUNE token should end up slightly higher, say by 2023, $15.01 at best.
It was created in 2017 and is an Ethereum token that enables the open blockchain-to-blockchain crypto transfer mechanism. The supply of this crypto is capped at 100 billion tokens. It has a market capitalization of around $440 million at the time of writing.
Its sophisticated algorithms and cryptography will facilitate the movement of many digital assets between blockchains. As you can see, this penny crypto provides the market with a valuable service. Many market commentators foresee this being one of the most promising cryptos for investors to add to their portfolios.
Today’s REN price is $0.357777, which is down 5% over the last 24 hours. It has a circulating supply of 1B REN coins and a total supply of 1B. The 24-hour trading volume of REN is $25,045,378.
- REN hit an all-time high of $1.80 on Feb 20, 2021.
- REN had an all-time low of $0.015480002696 on Feb 25, 2019.
Where to buy it?
It is traded on 60 exchanges.
What are the perspectives of the REN?
Its price prediction for 2022 sees the coin reaching around $0.48 as soon as May, representing a 43% return on investment. It is expected to trade at a similar level by December, around $0.48. The REN price could then rise to $0.53 in April 2023 and $0.54 in April 2024.
Pros and cons
|Worth to buy||Worth to getaway|
|Supply-demand dynamics can result in hefty returns.||Investing in Bitcoin or other altcoins can be risky.|
|The blockchain technology underlying crypto is inherently secure.||As a crypto investor, you need to be aware of your responsibility for paying capital gains tax.|
|Cryptos could help investors beat inflation.||Crypto’s crash shows that digital currency is not a hedge against inflation.|
Technology is more advanced than in any previous periods of high inflation, and cryptos are proving why this could change the way the world finances. This is what crypto promises that gold or precious metals never can: changing the way the world works in the future. The risks are clear. Research is key. But there’s never been a better time for backing crypto than now.