Cryptocurrencies as protective assets in the investment market

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The founder of the decentralized hedge fund X11 commented on the current situation in the cryptocurrency market amid ongoing geopolitical tensions and a new wave of sanctions.

Investors in Europe and around the world are worried about the ongoing economic crisis, there is a flight of capital from government debt bonds of Great Britain and Germany. The high inflation rate of fiat currencies forces us to look for alternatives. For investors from the CIS countries, this is even more relevant in connection with the adoption by the EU of the eighth package of sanctions against Russia.

Government debt and government bonds are one of the most reliable types of investments, where trillions of dollars of liquidity are invested. Where can investors from the CIS countries direct all this liquidity and do cryptocurrencies have the opportunity to become protective assets during the global economic crisis? The founder of the decentralized hedge fund X11 Finance Pavel Andreev spoke about possible scenarios.

New opportunities 

According to Pavel, now investors should exhale a little and calm down in order to make informed decisions.

“Now almost all world markets are in a state of fear and uncertainty, panic reigns in them,” says the founder of X11. “At a time when the global economy and the old fiat financial system are in a severe crisis, it is worth reallocating part of your portfolio to cryptocurrencies. At least in order to protect their savings from sanctions.”

Skeptics believe that today the crypto market is just one of the highly speculative sectors of the global derivatives market. And although both of these markets rose during the coronavirus epidemic amid high stimulus, they are now doomed to fall as the Fed rates rise. Pavel Andreev does not agree with this assessment. 

“In my opinion, the events taking place in the global economy are much deeper and fundamental changes are needed to overcome the crisis, including more active use of cryptocurrencies as a means of payment and a way of saving. For this reason, I expect bitcoin and other cryptocurrencies to be “decoupled” from the rest of the market, including because there are practically no alternatives for investors from the CIS countries other than cryptocurrencies,” notes Pavel Andreev.

Crypto Market Growth Factors

In his forecasts, Pavel identified three main positive factors for the cryptocurrency market. The overregulation of international payments and trade wars only intensify with each new wave of geopolitical tensions. This leads to the fact that the prices of cryptocurrencies will go up. “This is especially true for Russia, where cryptocurrencies are now being legalized for international payments. After that, I expect a massive flow of liquidity into crypto,” Andreev says.

Another underestimated advantage of the crypto market is the ability to create decentralized investment solutions with a high degree of privacy. 

“Large players have long paid attention to the crypto market, but in this market there are practically no solutions for investing in classic assets. Now such solutions are also available for classic investment assets such as stocks and preIPOs. One such solution is our X11 fund.”

Thanks to the emergence of such solutions, residents of the CIS countries will be able to invest in classic assets using closed solutions on the blockchain in order to protect themselves from direct sanctions. 

The third factor that X11 is counting on is the rise in the price of BTC, as digital gold and a reserve asset that no one controls, which means it remains the only reliable store of value. “Bitcoin has practically no inflation, it is very easy to buy it in almost any country in the world, there are no restrictions on the amounts that can be invested there. Capital will flee there from the ongoing crisis of the global financial system,” Pavel Andreev is sure.

According to experts from the X11 hedge fund, buying bitcoin in the long and even medium term on the horizon of several months is a profitable investment and a way to save your money.

What is X11

X11 is a decentralized and private hedge fund that invests in stocks and crypto assets. X11 founder Pavel Andreev is working on creating innovative fintech products. In addition to X11, he develops Bank11 neobank. Both products use only cryptocurrencies and stablecoins in settlements with clients and do not use fiat. Bank 11 does not have access to customer funds.