Fidelity’s Jurrien Timmer: Bitcoin, Crypto and Cash Remain Key in Portfolio Hedging Strategies

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Written By Maya Cantina

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Wed, 10/04/2024 – 10:36

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When it comes to protecting your investments, having a mix of different types of assets is key. Diversifying with some cash, cryptocurrencies like Bitcoin and commodities can help keep your portfolio stable when stock prices fall.

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Cash and alternatives are often used to balance out the ups and downs of the stock market. When stock prices drop, cash usually remains steady or becomes more valuable. This is because cash, especially in the form of U.S. dollars, often moves in the opposite direction to stocks.

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According to the most recent data shared by Fidelity’s analyst, Bitcoin and other cryptocurrencies are becoming more popular for investors who want to spread their risks. Bitcoin is moving differently from stocks, which is why it can be chosen as an alternative. For example, thanks to halving cycles, the digital gold may ascend while stocks and the economy in general struggle.

Timmer suggests that these different assets — cash, Bitcoin and gold — are like tools that investors can use to protect themselves against stock market losses. All of these are measured against the S&P 500. Obviously, if the S&P 500 goes down but these other assets do not, your investments might not lose as much value, which is why investors hedge.

Having a mix of cash, cryptocurrencies and commodities could help safeguard your investment portfolio during times when the stock market is unstable. This strategy is all about finding a balance between keeping your money safe and still having the chance to see it grow.

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