Grayscale: Bitcoin is Hedge Against Global Liquidity Crisis

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Digital Currency Group’s investment fund Grayscale Investments has published a fresh report that supports Bitcoin as a potential alternative to hedge against any global liquidity crisis.

Examining five recent “macroeconomic shocks”, the report gives clear evidence of Bitcoin outperforming other investments as a store of value. According to the authors, case studies were able to extrapolate these events: Grexit, Brexit, Chinese yuan devaluation and two Trump shocks. They showed that investors could help protect their portfolios from these economic failures simply by diversifying into Bitcoin.

The report’s authors, according to CoinDesk, say that the world’s most used crypto should be considered to have a position of strategy within investment portfolios. Its transparency, immutability and liquidity gloablly is enough justification for this. This does not even mention other unique properties which differentiate it from any other class of asset, allowing it to perform in turbulent market cycles as well as in average economic conditions.

Grayscale also says that policymakers and leaders will find it more and more challenging to manage state economies as monetary, fiscal and trade policies globally enter a period of change, and investors will feel the need to take control of their own financial destinies, adding the impetus for Bitcoin.

In the case study ‘Grexit and the 3-week Greek bank shutdown’, the authors determined Greece went into a liquidity crisis thanks to defaulting on sovereign debt. This led to a closure of national banks and strict capital controls for only three weeks as the nation negotiated with international creditors — sparking debate about centralized states holding too much power over holders of centralized assets.

The Grayscale authors point out:

“…during the liquidity freeze, Bitcoin emerged as one of the only means by which to transfer value in or out of Greece, reinforcing this new asset’s ability to return the power of control to the individual who holds it.”

Prior to the resolution of Grexit, Bitcoin gained 28% versus a negative 1.7% performance with 20 other markets and currencies.


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