Bitcoin and Beyond: Diversifying Your Portfolio in Uncertain Times

The current global economic situation is undoubtedly one of the most challenging periods in recent history. From the ongoing pandemic to economic depression, inflation, and a reduction of natural resources, it's not the best time to live in. In addition, the financial market has not been spared from the economic downturn, with the last bull run of cryptocurrencies being fueled by the Federal Reserve's (FED) quantitative easing policy.

The FED's policy involved printing money and buying financial assets like bonds from financial institutions, introducing new money into the economy. As a result, the world's four major central banks printed $11.3 trillion, which is a 73% expansion since the beginning of 2020. However, with all this money around, there was a discrepancy between the amount of money and the production of general goods, leading to an increase in the price of goods.

With inflation well above target levels, central banks have ended quantitative easing, started quantitative tightening, and raised interest rates. This has resulted in a full reverse in the economy, pulling out money from markets. Unfortunately, this has had a terrible impact on the cryptocurrency sector, which saw a significant drop in prices.

The FED's latest move involves injecting $2 trillion of liquidity into the economy. However, this move is seen as insane by many, especially given that inflation has never come back to the FED's target of 2%. While the inflation rate is lower than the annual peak of 9% in June 2022, it is still significantly above their target.

The massive amount of money previously printed was not under control, which is why there is a need to increase the balance sheet. Banks seem insolvent, and they need a loan from the FED to hold up. Unfortunately, they were not prepared for the speed of the increase in rate hikes, meaning that they didn't hedge their bank positions.

Crypto plebs and Bitcoin supporters have been anticipating the FED's fate for some time. The fiat system is sick, a system where money can be printed and manipulated when needed. The Federal Reserve is at a lose-lose watershed: they can cut rate hikes, increase the balance sheet, print more money, and inject liquidity to save the system, which will translate into a hyperinflation scenario, as seen in the latest years. Alternatively, they can continue the rate hikes policy and face the ongoing debt limit crisis, which raises questions about whether they will have enough money to cover bank deposits.

Many people believe that if central bankers show they are concerned about a possible banking crisis, the market may think the Fed knows the financial system is in serious trouble, and things are more dire than previously thought. They cannot afford to lose their face. Inflation will likely go crazy, way beyond our expectations, and people will look for new alternatives due to the devaluation of the dollar.

Bitcoin is the alternative that comes to mind, but there's a catch. People will create mass FOMO compulsive buys driven by the narrative that Bitcoin is the alternative. These buys will create speculation, something that market makers know very well and use to trap late FOMO buyers, regardless of the narrative. While Bitcoin has amazing characteristics and is a decentralized hard-capped money, it's important to be careful as the current market cap makes it easier to manipulate the price.

Bitcoin needs to grow to a trillion with an established capitalization to prevent or make it more difficult to manipulate and create speculative moves. People need to be careful because we're still living in a world that is prone to huge hidden and sophisticated skullduggeries.

It's crucial to prepare ourselves for what's happening right now. Unfortunately, the majority of people are not aware of the situation, and they live under a rock because the system has instilled in them the approach of not thinking. This lack of awareness is dangerous, as it can lead to people being unprepared for potential economic crises. Many financial experts have been warning of the dangers of inflation and the potential collapse of the financial system, but their voices are often drowned out by mainstream media and the government's reassurances.

The truth is, the global economy is a complex system, and it's difficult to predict how it will behave in the face of economic shocks. However, it's important to be prepared for any eventuality. One way to do this is by diversifying your portfolio and investing in assets that are not solely reliant on the fiat system.

Cryptocurrencies like Bitcoin and Ethereum offer an alternative to traditional fiat currencies, and they have the potential to act as a hedge against inflation. However, as mentioned earlier, it's important to be cautious when investing in cryptocurrencies, as they can be highly volatile and prone to manipulation.

Another way to prepare for economic uncertainty is to invest in physical assets like gold, silver, and real estate. These assets have a long history of retaining value during economic downturns, and they are often seen as safe-haven investments.

In addition to diversifying your portfolio, it's important to educate yourself on financial matters and keep abreast of the latest economic developments. By doing so, you'll be better equipped to make informed decisions and navigate the uncertain waters of the global economy.

In conclusion, the current global economic situation is a cause for concern, and it's important to be prepared for any eventuality. By diversifying your portfolio, investing in alternative assets, and educating yourself on financial matters, you can increase your chances of weathering the storm and coming out ahead. It's time to start thinking critically about the state of the global economy and take proactive steps to protect your financial future.