by | Apr 5, 2021 | Newsletters

You might’ve heard about the “NFT craze” that’s going on right now. NFTs, or “non-fungible tokens”, skyrocketed in popularity in March, with $220 million in sales in the month of March alone—for reference, the entire year 2020 saw only $250 million in NFT transactions. One auction had a single NFT sell for a whopping $69 million. 

An NFT is a type of digital art or collectible attached to the blockchain with the author’s signature attached to it. It’s an innovative way to own art in a way that irrevocably proves the authenticity of the artwork. Today, it’s a booming industry powered by cryptocurrency. 

The adoption of NFTs is a great sign for the future of the cryptocurrency market. NFTs depend on cryptos like bitcoin and ether to facilitate the transactions. If the NFT market continues to expand, we should see cryptocurrency values rise in step.

Digital Assets See Further Institutional Adoption in March

Plus, Goldman Sachs recently announced their intention to offer bitcoin and other digital assets to its wealth management clients. They’re following in the footsteps of Morgan Stanley’s wealth management division, which started offering access to crypto investment funds earlier this month.

It gets even better. Earlier in March, PayPal started allowing U.S. customers to use cryptocurrencies for online payments with over 25 million vendors worldwide. Within months, the service—which includes litecoin, ether, bitcoin, and bitcoin cash—will be available to all 29 million of PayPal’s global merchants. 

Institutional investors are getting on board with cryptocurrencies too. On the 24th of March, Fidelity Investments (“Wise Origin Bitcoin Trust”) filed with the SEC to offer an all-new proprietary cryptocurrency ETF. This immediately follows VanEck’s filing for a prospective bitcoin ETF, which the new Biden SEC (staffed with pro-crypto appointees) has fewer than 45 days to approve or deny.

For the first time in history, it feels like real mass adoption is on the way for cryptocurrency. Now is the time to capitalize on the momentum, before it’s too late. 

A New Buying Opportunity in April?

Crypto’s not the only buying opportunity in the market right now. Gold is down on the month, dropping very slightly about -0.56% between the 1st and 31st of March. Likewise, COMEX gold futures dropped to $1,686 per ounce (-1.67%). 

Why the sudden change of sentiment in the gold market? All signs point to a strong U.S. dollar as the culprit. The U.S. Dollar Index, which tracks the value of the dollar against six other major currencies, rose from 90.6 to 93.1 in March. A relatively well-performing U.S. economy, backed by strong federal stimulus policies, has solidified the dollar and, in turn, has lowered demand for precious metals.

But for how long can we count on a strong U.S. dollar? Consumer prices are already rising faster than the Fed’s two percent target rate. Certain analysts, such as Nick Colas, founder of DataTrek Research, foresees the return of inflation “[and] perhaps with a vengeance”, due to a variety of bearish macro indicators. Likewise, Ron Leven, Professor of Economics at Duke University, also sees inflation on the horizon, particularly in 2022. 

Between inflation and wanton deficit spending, conditions are ripe for entry into cryptocurrency and precious metals. What traditional markets go haywire, alternative assets are often our last line of defense. 

Investing in cryptocurrencies and precious metals is an excellent idea for risk-conscious investors. If you want to hang onto more of your wealth when the market crashes or corrects, consider adding bitcoin to your IRA today. It’s never too late or too early to protect your savings. 

 

Mark Turner

Mark Turner is an author and editor at Sophisticated Investor. He has over two decades of experience in the financial industry as a broker in both Chicago and New York and has written for several top tier publications. He currently covers the topics of alternative investments, geopolitical events, US economy, portfolio diversification and others.

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