Kim Dotcom is an “internet entrepreneur” famous for founding the now defunct file hosting website MegaUpload and for generally being a huge nuisance for the government and the establishment (accused and currently tried for criminal copyright infringement, money laundering, racketeering and wire fraud). He continued acting in that disruptive vein by posting some words of wisdom for his twitter followers after the “trade war” between USA and China officially started.
Upon hearing the news that Trump admins, in a bid to protect domestic industry and production, introduced tariffs on $34 million USD worth of Chinese goods and that China retaliated with a reciprocal measure, Kim Dotcom tweeted out the following gem:
“As the trade war between the US and the rest of the world begins sell stocks and buy crypto. Markets will drop.”
Besides the usual Ethereum sending bots spamming the timelines of verified crypto accounts, there were a couple of interesting responses to his comments.
Is switching to crypto a good idea?
Some people jumped at the idea, claiming that it’s an excellent one and that everyone should consider doing exactly what Kim suggested. Others however didn’t have a positive outlook on his words and ended up criticizing them.
The main reason for selling your stocks here would be the possibility that a large scale trade war between USA and the rest of the world could negatively affect the world’s economy. Stock markets could plummet due to the general uncertainty/a loss of profits that such a war would bring and Kim suggests that investing into crypto is a viable way of preserving your wealth.
Except cryptocurrencies themselves aren’t exactly known as the best value storing/keeping assets. In fact, they are currently probably the most volatile asset that you can put your capital in. While cryptocurrencies have shown a tendency to go against the traditional markets, the prices can fluctuate wildly in this space. This means that your today’s investment can easily turn into tomorrow’s loss, no matter what the stock market looks like.
Risk averse investors who are looking to avoid the potential downsides of an all-out global trade war will have much more safer assets to put their money in. Precious metals, government bonds, cash are all much more viable and stable means of preserving value in a time of economic crisis. Those more inclined to risk can store their value in ETF’s and similar funds or by shorting the bear market.
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However, the fact remains that with high risks come high rewards. Crypto, being the risky asset that it is, does promise excellent returns to those who invest into it. If we combine the looming trade war with talks of current crypto bear market nearing its bottom/economists generally agreeing that diversification helps reduce investment risk, now wouldn’t be the worst time to heed Kim’s words and make your first foray into crypto investment.
