Nervous About the Bitcoin Decline? There are Hedging Strategies to Take to Minimize your Risk

The last few months have been a wild ride for Bitcoin investors. From its meteoric rise to losing half its value in the following two months – it is hard to predict what will happen next with the world’s most popular cryptocurrency. 

If you have some risk aversion – just like when online betting at a sportsbook – you can take different hedging strategies to help minimize your risks (or even increase your potential earnings).

Diversify your Crypto Wallet

To diversify your crypto wallet (or portfolio, whatever you want to call), you need to have an understanding of multiple factors. 

  • You should know the technology below the cryptocurrency
  • You should understand how much of the cryptocurrency is available
  • You should understand the different crypto options – for example: Altcoins, Stablecoins, and tokens
  • Look for coins that could gain more acceptance by central banks (this one is hard to predict but worth following in the news)
  • Look at the cost of coin transactions and look for ones lowering energy usage. 

Knowing what coins could surge in the near future and what options could present longer-term growth and may help your portfolio produce more sustainable profits with fewer wild swings that cut its value by significant percentages. 

Look at Real Estate Investment Options 

If you can afford real estate, it is one of the best investments you can make in 2021. Real estate in many markets in North America, China, parts of Europe, and Australia – are reaching all-time highs, with prices likely staying high with interest rates remaining so low.

Houses are the biggest gainer recently, but just about everything is selling at high prices. Pre-constructs – the most affordable option, are also a good strategy, as the return of people to cities and new immigrants is likely to stay slow for the next few months but start to pick up again in 2022 (and onward). 

Consider a 5% to 10% Switch to Gold 

While the upside to gold is not quite the same as it used to be – due to the growth of cryptocurrencies – its downsides are not quite as extreme either. Some investors are considering moving some more funds back into gold, which could help drive up the price in the short term.

If you do not have any gold in your portfolio, consider adding some in, up to 10%. It could help hedge against more declines in cryptocurrencies and surge in price as more investors return to the precious metal as a safe investment option. 

Invest in Industries set for the Biggest Recoveries

The stock market has undoubtedly gone through a wild swing over the last year and a half. While the recovery is moving in a positive direction on many exchanges, the most significant recoveries will come from the industries still dealing the most from the Covid-19 Pandemic.

Airlines that make a significant portion of their operating income from international flights are some of the last to recover. This presents investors the options of getting in on them, with hopes of a return to pre-pandemic levels by some point in 2022. For example, some airlines’ stock fell by 50% or more but have yet to recover much more than 20% of their lost value).

You can add some of these options into your portfolio in hopes that within the next year or so, they will reach their old values (and continue to grow into 2023 and beyond). 

NFTs (Non-Fungible Token)

While some may say NFT’s reached their peak a few months ago, if you invest in suitable options for low prices, you stand to profit. 

Knowing what is popular now, what will retain its popularity, and what will soon see a growth in popularity is each important to having success investing in NFTs. 

We do not recommend making a large part of your portfolio’s NFTs, but sprinkling in a few (as long as the cost is right) is something you can consider.

A Few Others

Here are a few things you can invest in 2021

  • Sports and other trading cards
  • Retro/excellent condition video games
  • Safe stocks and options
  • Savings accounts if interest rates increase