Cryptocurrency is plummeting, primarily driven by the Bitcoin crash, and is even hitting the crypto brokerage Coinbase extremely hard, with tech stocks feeling a crunch as well. Elon Musk and others say invest in physical things.
How bad is the crypto crunch? The world’s richest Bitcoin trader lost $4 billion in just a month. This anonymous billion had over 252,000 Bitcoins worth $12 billion at the end of March, according to BitInfoCharts.
Coinbase, a cryptocurrency exchange platform, was slammed by the Bitcoin crash. It has seen its shares plummet by 25%, down over 75 percent this year, and trading nearly 85% below its all-time-high price in November only a few months ago. In just the past week alone, its shares have lost half their value, CNN reports.
Tesla chief executive Elon Musk invested $1.5 billion in Bitcoin on Feb. 8, 2021, and the company was beginning to accept the digital currency as payment for buying its electric vehicles. The company has reportedly lost $150 million in the current slump, according to Bitcoin Treasuries.
What has Elon Musk learned from this? You’re about to find out.
Just shy of two months ago, with inflation already starting to hammer investments, Elon Musk offered some advice on Twitter for investing during difficult economic times.
“As a general principle, for those looking for advice from this thread, it is generally better to own physical things like a home or stock in companies you think make good products than dollars when inflation is high,” Musk wrote. “I still own & won’t sell my Bitcoin, Ethereum, or Doge fwiw.”
Of course, this was well before the current Bitcoin crash.
Generally speaking, after inflation hit another 40-year high, many analysts are advising investors to consider diversifying their portfolios by including physical assets, Binziga reports.
Here are three physical assets investors might consider adding to their portfolio: Real estate, fine art, and farmland.
In general, real estate tends to perform well during times of high inflation. The four types of real estate that perform well are single-family homes, multi-family homes, self-storage, and farmland.
If you already own real estate, you’re aware of how prices are skyrocketing. If you don’t own real estate yet, it will cost you more to obtain it. However, another option would be to buy shares of large-scale developments or rental properties and look for opportunities in the fastest-growing cities in the country.
In recent years, Bill Gates has been buying up farmland in the US and is now the single largest owner of such property in the nation. The global demand for food is steadily rising, while farm acreage across the US is shrinking at a rate of more than 1 million acres annually. Given these facts, the likelihood of the value of farmland increasing appears strong.
Art seems to only increase in value, and in fact, it has outperformed the S&P 500 for the last 25 years, appreciating at an average rate of 23.2 percent years where inflation is at least 3 percent. No longer is investing in art limited to the super-wealthy. There are now opportunities to buy shares of valuable works of art.