Should you park your money in crypto if there’s a recession?


As inflation continues to rise, the housing market cools off, and a global recession looms on the horizon, you might be looking for a new safe haven to park your money.

Traditionally property has always been a fairly safe bet in Australia, but at the moment it’s entirely possible that house prices could plunge up to 30% in the next four years. Yikes! 

What about gold? According to investment management girl BlackRock, even gold is becoming a less effective hedge against inflation. 

So what’s the solution then? Could cryptocurrency be the answer? There’s no doubt that more and more investors are adopting this strategy. In this article, we’ll explore the changing landscape and what you need to be aware of as a crypto investor. 

The landscape is changing

It’s looking more and more likely that digital currency is here to stay. 

Since as early as 2009, cryptocurrency has offered investors a different and more accessible way to exchange. In recent years, investors (many first-time) have purchased, sold and traded cryptocurrency in record numbers. In fact, in 2021 the crypto market was worth a ridiculous 2.9 trillion. 

However things changed in June this year, when the crypto market lost an estimated 1 trillion of value. Ouch. This has led 72 of the top 100 tokens to plummet more than 90% of their all time highs. 

But if you’ve been following the crypto market for some time you’ll know that this isn’t the first time crypto has experienced a large dip in value and the signs say that it’s not going anywhere anytime soon. 

What you should be aware of if you plan on investing in crypto

Thinking about investing your savings in crypto? Here are some factors to consider before you take the plunge: 

Crypto remains highly volatile 

The crypto market is still speculative and unstable, meaning that your assets may see major fluctuations in value. Before you start investing, take the time to educate yourself properly on the digital currency world so you know how it works. 

Cyber attacks are possible

By and large the crypto market is unregulated, meaning that it isn’t influenced by the government (though you’ll still have to pay taxes on it!). Because the market isn’t overseen by a government agency, the exchanges that host digital currencies are more likely to be susceptible to hackers and other cyber criminals.  

There’s plenty of cryptocurrencies to choose from, but not all are equal 

The latest data tells us that there are over 19,000 cryptocurrencies available today. That said, over 1700 have become what’s known as ‘dead coins’ or discontinued. Why? It’s most likely that crypto developers have designed the business use case for their coins well enough, meaning their crypto has flopped after launch and hasn’t been adopted well enough by the market. 

Invest in the stocks if you’re risk-averse

While not as lucrative, if you’re looking for a generally safer investment opportunity you may wish to consider buying stocks in companies with exposure to cryptocurrency. 

Want tailored advice from a specialised cryptocurrency accountant?

Infinity22 is the leading expert in crypto accounting for cryptocurrency, NFTs and Web3 investors. Book an appointment with us today to take control of your cryptocurrency investing.