Crypto markets continue their surge amid broader macro uncertainty

Hey there!

I hope you guys had a relaxing weekend after a nail-biting week filled with positive crypto moves and dangerous stock market swings. We are here to help you start your week with a quick read focused on investment that can help you save taxes and evaluate your equity portfolio to cushion it against sharp downturns. We also bring you a short update highlighting the major movements in the crypto markets and recommend a book that can help you invest better and as always, finish the read with a fun crypto crossword.

Let’s get started with this week's read!

Paying taxes is something we can’t do without, but we can reduce our tax liability by investing in tax-saving investments. And, if you are wondering if you can save taxes by investing in FD, look no further as we bring to you an explainer video on Tax Saver FDs.

Click on the link below to learn more about how you can minimize your tax liability by investing in a Tax Saving FD.

Up next, we talk about investment options that can help you stabilize your portfolio to make it somewhat immune to global unrest and unfavorable geopolitical developments.

The Indian equity markets have been on a rollercoaster ride for the past 10 days. And when equity markets enter a bear phase, so do our equity portfolios. This means that in case you need emergency funds during these bear phases, you will have to liquidate a portion of your portfolio at a discount or lower profits. This is not an ideal scenario. You can cushion your portfolio against such market shocks by including safer investment alternatives with steady returns in your portfolio.

Here is a list of other investment alternatives that offer a steady rate of return. You can choose a combination of investment alternatives that match your risk tolerance and your investment goal.

• Fixed Deposits:

FDs are relatively safer investment alternatives that guarantee a fixed rate of return per annum. Fixed deposits are available for tenures ranging from 7 days to 10 years. You can choose an FD tenure that matches your investment goal and park a certain percentage of your portfolio in an FD.

If you are planning on booking an FD, this is a good time to book an FD as interest rates are high. This means you can book an FD at a higher rate and enjoy the benefits of higher interest for the duration of the FD.

• Investment in gold

Historically, gold prices increase during wars and global uncertainty as the yellow metal is seen as a hedge against risky asset classes. This means you might potentially gain by parking a portion of your portfolio in physical gold. You can also invest in digital gold by investing in Sovereign Gold Bonds or Gold ETFs.

• Hybrid and Debt Mutual Funds 

Unlike equity, debt is not volatile. This makes debt mutual funds stable compared to equity mutual funds. If you are looking for stable investment alternatives with low risk, you can consider debt mutual funds.

But if you are not averse to taking a little bit of risk, you can have a look at Hybrid Mutual Funds. These funds have a combination of debt and equity. While being more volatile than debt funds, these might also offer a higher rate of return than debt mutual funds.

All of the above are relatively safer investment alternatives with low to moderate risk. You will have to evaluate your existing investments, decide on your financial goal, and consider your risk tolerance. Based on the evaluation of these factors you may decide on investing a portion of your portfolio in these safer alternatives. Before you come to a decision, it is important to do your research, evaluate the risks associated with each alternative, and then act.

The crypto market continued its upward surge in prices, as the Bitcoin Spot ETF narrative continued to gain steam last week. Remarkably, crypto as an asset class has been decoupling from other ‘risk on’ assets like equities which corrected sharply due to the rising macro and geo-political instability. Overall, the total crypto market cap breached the $1.3 trillion mark last week, as all major crypto assets witnessed higher trading volume, with a buy-side bias.

BTC (anchor level now at $34k) has been dominating the rally and outperforming ETH (anchored ~$1.8k) in price gains. BTC's market cap dominance is now at a 30-month high and above 50%, highlighting the institutional demand that's incoming from the proposed spot ETF. BTC's rally has also been supportive of the broader crypto markets, as investors explore crypto as an asset class for allocation to diversify portfolio risks.

A big development on the institutional adoption front happened last week, as major European clearing house Euroclear unveiled its tokenized securities issuance service with the World Bank's 100 million euros digital bond issuance. Citi was the issuer agent and investment manager, while TD Securities acted as the dealer. The bond was issued on R3's Corda blockchain.

The gain in altcoins was much sharper compared to BTC, as investors started taking riskier bets and expecting outsized returns. Among the top market cap coins, worth highlighting were the gains witnessed in SOL, LINK, and MATIC.

A great indicator of "risk appetite" coming back to crypto markets is the soaring 100% price gains witnessed in meme tokens PEPE and FLOKI last week.

• BTC $34,580 ⏫ 13.83%

• SOL $34.81 ⏫ 17.80%

• LINK $11.45 ⏫ 13.98%

• MATIC $0.6444 ⏫ 5.69%

• PEPE $0.000001174 ⏫ 60.06%

Before we conclude, here’s a quick look at some important news from around the crypto world.

• The notional open interest of the dollar value locked in active bitcoin and ether options contracts on leading exchange Deribit has risen to $20.64 billion, according to data tracked by Swiss-based Laevitas. The current open interest in contract terms is significantly higher than in November 2021. Read more here.

• Polygon Labs has deployed contracts for the project’s next-generation crypto, POL, on the Ethereum mainnet following a testnet deployment in October. Read more here.

Coffee Can Investing

Author: Saurabh Mukherjea, Rakshit Ranjan, Pranab Uniyal

Coffee Can Investing talks about buying and holding a portfolio of high-quality shares for the long term, typically five years or more. Saurabh, the author of this book, follows the conservative Coffee Can approach to high-quality, low-risk investing. His firm, Ambit Capital, is one of the largest wealth managers in India which follows this investment approach to deliver stupendous returns. Saurabh discusses how to handle low-risk investments that generate great returns.

Read the book to gain valuable insights about portfolio creation and management.

Before you get on with your day, don’t forget to flex those brain muscles with our weekly crypto crossword.

That’s it for now. Thanks for sticking around.

See you later, folks! 👋

Loving the newsletter? Make sure to spread the love and hit share!