With Rumours Of A Recession & War Rising, Is Crypto Really A Hedge During Times Of Turmoil?

I’ve been doing a lot of thinking recently. It started after Israel & Iran news caused negative price action within minutes of the news of war breaking out.

Constant trading can lead to continuous volatility, making it challenging for investors to stabilize their portfolios. Unlike stock markets, which have set trading hours and can implement halts during extreme volatility to protect investors, the cryptocurrency market’s nonstop nature allows for immediate access to capital and may exacerbate panic selling and rapid price declines.

The high liquidity in cryptocurrency markets, while offering flexibility, often result in swift and severe losses during a crash, making it difficult for existing investors to make informed decisions and manage risk effectively.

The perception that certain cryptocurrencies, serve as a hedge against inflation and currency devaluation is based on their limited supply. However, can this perceived advantage also pose significant risks?

In times of economic instability, the volatile nature of cryptocurrencies may lead to unpredictable price swings, undermining their effectiveness as a reliable store of value. While stocks can be affected by company-specific and macroeconomic factors, they are backed by tangible assets and earnings, providing a level of intrinsic value and stability that some cryptocurrencies lack.

So what’s the right thing to do here? Should I move cash to the sideline and if price enters price discovery and finds a new lower equilibrium repurchase? Should I restructure to move away from coins seen as stores of value to coins to programmable tokens that in theory should be earnings backed? Do I need to balance across both? Examples of each below

Store Of Value: Bitcoin, 95% circulating with limited supply

Programmable: Ethereum, Polkadot & Solana, non-finite supply causing continuous risk of self-inflation

Programmable Store: Algorand, Cardano, over 80% circulating with limited supply

Alternatives: Avalanche, ChainLink, limited supply but low circulation. Will earnings from usage outweigh inflation from circulating supply growth?

Interested to hear your thoughts.