The first “cryptocurrency” exchange platform in Italy is called Crypto Smart (cryptosmart.it) and has its tax office in our country, a fact that traders know well to be important in the tax return. Where did the idea of creating a “bag” for the purchase of Bitcoin, Ethereum and other major digital tokens come from? The founders have no doubts: fiat coins are gradually and rapidly losing value.
Crypto Smart to invest against inflation
In recent months, the problem has been talked about with insistence inflation. It had been invoked as the Holy Grail for about a decade, and as soon as it appeared there were concerns about how to contain it. What happened? During the pandemic, hundreds of millions of people around the world had to be sued on orders from governments to curb infections. Many businesses have had to temporarily close, consumption has collapsed to be reduced to what is strictly necessary and savings have exploded.
Meanwhile, central banks have injected liquid assets at an unprecedented pace. Tens of trillions of dollars around the world in a very short time to keep rates off and allow governments to borrow to support their economies. And so, they have in turn pumped liquidity through gigantic fiscal stimuli, mostly in the form of subsidies to the categories affected by Covid. Result? Families found themselves in possession of dollars, euros, pounds, yen, etc., in the face of production in many cases collapsed.
As the restrictions have been relaxed, consumption has restarted, while supply has not followed the pace, also because bottlenecks have been created in the meantime due to the interruption of (long) production chains and the shortage of some inputs such as chips.
The excess demand translated into a push to prices, in many cases exploding to all-time highs. Let’s talk about raw material such as copper, aluminum, timber, petroleum, silicon metal, natural gas, etc.
Even the big names in finance are betting on Bitcoin
Did you notice that during the pandemic Bitcoin jumped to its new records, hitting $ 65,000 last April, about 8 times its value a year earlier? Does it seem random to you? Crypto Smart doesn’t think so. The fact would be this: the market has been looking for new assets to bet on to protect itself from the loss of purchasing power. Attention, because this would be more marked than what the official data of the various national statistical institutes are saying. Moreover, even before Covid, the printing of the main currencies was growing year by year at even double-digit rates.
Bitcoin holders tend to increase at the rate of 3 million per week. There are already 120 million in the world. And unlike in the recent past, even institutions such as banks and investment funds have entered this market for now $ 1 trillion. Let’s talk about the tenor names of Goldman Sachs, Morgan Stanley, JP Morgan, Fidelity, BlackRock, the George Soros fund, etc. Among the individual gurus of finance, we find characters like Ray Dalio, Paul Tudor Johns, Druckenmiller, but also big capitalists like Elon Musk, Jack Dorsey and Michael Saylor.
Crypto Smart looks to the future
Why is it important to mention these names? The mere fact that the big names in world finance are starting to use part of their liquidity in assets such as Bitcoin reveals that: 1) they too have serious doubts about the resilience of traditional assets, whose prices are now magnified by a bubble very dangerous and difficult to stop. See, in particular, the bond market; 2) they are confident in the prospects for digital tokens and 3) state authorities, including central banks, are unlikely to want to hit a business that has entered the investment halls that matter in the future.
In conclusion, Crypto Smart was born from the awareness that traditional assets would no longer be able to protect the invested capital. The same strategy as wallet 60/40 it is now showing worn out and counterproductive, given the high correlation in recent years between stocks and bonds. Conversely, Bitcoin is an asset unrelated to others, so it would be better able to protect capital during negative phases on the financial markets. And the growing trend of its prices over time makes the “cryptocurrency” quite suitable as store of value, although to date it is still not very widespread as a means of payment, either due to technical impediments, or also due to the volatility of the prices themselves.