Cryptocurrency and Inflation
How to Hedge Against It With A Traditional Finance Investing Strategy in DeFi.
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This week we’re touching on the topic of inflation.
We’re going to review an article from the Wall Street Journal. “U.S. Inflation is Highest in 13 Years as Prices Surge 5%”
Now, the US economy is always conservative when it comes to inflation. They always put out more conservative numbers than the reality.
Let me ask you. When you go to fill up your tank of gas are you just paying 5% more for that gas?
Or is it a shit ton more?
Let me ask you something else. This time today, (compared with last year wherever you live in the United States) if you go to purchase a house or a condo, are you paying 5% more than last year?
No, you’re paying 24% more than last year and for gasoline, you’re paying about 56% more than you were at this time last year.
“The U.S. economy’s rebound from the pandemic is driving the biggest surge in inflation in nearly 13 years, with consumer prices rising in May by 5% from a year ago.
The Labor Department said last month’s increase in the consumer-price index was the largest since August 2008, when the reading rose 5.4%. The core price index, which excludes the often-volatile categories of food and energy, jumped 3.8% in May from the year before- the largest increase for that reading since June 1992.”
When the US government comes out and prints more than 25% of all the US dollars ever created in one year, drastically increasing the supply of money, what do you think is going to happen to the prices of things?
Across all sectors, prices have surged in the last year. This includes real estate, cost of goods, used cars, and even the cost of labor. Restaurants can’t even hire employees because they can’t afford to pay them enough.
Overall though inflation could help cryptocurrencies as we’ve seen major institutional investors come out and say that they’re now buying bitcoin as a hedge against the US dollar. This is also probably a reason why El Salvador decided to accept bitcoin as a form of currency since the US dollar is their currency.
So even though inflation is a real concern among the general population, it will probably continue to help cryptocurrencies.
This leads us to a project that we’ve been doing a lot of research on here at defiboost.
Ydragon allows you to invest in several crypto projects at once. A lot goes into the due diligence process if you want to do it properly, and there’s a good chance some of the projects you’re researching might not make it in the end.
There’s just a lot of work in order for you to figure out which projects are the real deal and which projects are not. Ydragon is essentially an index fund, which is one of the safest investments in the traditional model of finance.
For example, if you buy the S&P 500 index fund, historically it gives you a good return-on-investment (ROI) because that index fund disperses your money into several different projects. So this is what Ydragon does for the crypto marketplace. It gives you the ability to invest in several crypto projects without having to do all the due diligence yourself. They do all the due diligence for you.
Here are some of the advantages we’ve seen so far from Ydragon:
- Reduce your costs of investing in multiple projects with one transaction and one token. Instead of going out and purchasing ten tokens, you’re purchasing one token through Ydragon and it’s being invested in ten different projects.
- You spend less time researching projects. If you want to be involved in crypto, you don’t want to spend hours reading up on a project to figure out if they’re legit. Instead, you can buy a Ydragon token and let their team spend time researching and you still get ownership in the end.
- There’s an ease of use since you don’t have to use multiple exchanges and networks. You've invested in several projects in one place (under one network and one exchange) where all your tokens accessible.
- It’s also safer and less risky than diversifying your portfolio yourself. If you look at an index fund in the traditional finance model, an index fund is a much safer investment than you going out and purchasing twenty stocks that you like.
So we think this is obviously a fantastic project, but also encourage you to do your own research to make sure it’s the right fit for you.
Comment below and let us know what you think about Ydragon and inflation.
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