Many crypto enthusiasts expected a bitcoin bull run at the end of 2021, going into January 2022. Unfortunately, this didn’t happen. The bear market is here and crypto investors should start looking into alternative options like art.
The Troubling Dip
Bitcoin was down nearly 40% around January 8, 2022, from an all-time high of almost $69,000 in November 2021. On the other hand, the popular meme digital currency SHIB dipped by 80% around the same time. Other altcoins, including ether, have faced a decline as well. Crypto prices have remained pretty much unimpressive across the board, which spells bad news for investors who are keen to see their portfolios grow in value.
Here’s a record of bitcoin’s price drop from January 5 to January 10, 2022, as reported on Coinmarketcap.
The chart below shows a decline in the price of SHIB from January 6 to January 10, 2022, according to data from Coinmarketcap.
According to an article on Bloomberg, the current bear market is in anticipation of a rates increase by policymakers.
Stephane Ouellette, chief executive and co-founder of crypto platform FRNT Financial Inc. said: “If they’re going to hike rates three times in 2022 and keep the program, and the era of low rates is over, we’re going to really see how much people believed in their Bitcoin-crypto thesis. I would expect that the Fed getting more and more hawkish is very bad for valuations.”
When the financial conditions become harsher due to higher rates, experts believe that investors will stop putting money in risky investments like crypto. Therefore, the status quo is in anticipation of money leaving riskier investments. The hike in rates is expected to start in March.
A look back at history indicates that bitcoin’s performance has suffered before thanks to an increase in rates. December 2018 was the last time the US central bank hiked interest rates. In the last two months of that year, bitcoin experienced a loss of over 40%.
Whether the crypto market will suffer a further decline when these new rates are implemented in 2022 is not entirely clear. But instead of living in uncertainty and fear, you can invest in a hard asset like art.
Why is Art Investment Better?
Investors often overlook art, yet it holds so much potential as an asset class for these reasons:
- Art tends to be very valuable and this value appreciates over time.
- It acts as a hedge against inflation.
- The value of hard assets can’t be wiped out overnight compared to crypto and stocks.
- It’s ideal for diversifying a portfolio.
- Art offers personal satisfaction
Let’s use our art-backed security token as an example. While bitcoin and Shiba Inu were experiencing a price decline, MS Token (MSTO) appreciated 2.2X during the same period. This emphasizes the diversification advantage art brings to any investment portfolio.
At the time of writing this article, MS Token was trading on Cryptosx at a market price of US$7.5. To buy or sell this token, register on Cryptosx now and complete investor accreditation.