In the midst of a high interest environment in Brazil and the world, investors are looking for alternatives to protect and multiply their capital.Bitcoins, the market’s leading cryptocurrency, has emerged as a high volatility option — but also of expressive valuation potential. The competition between these two assets for global liquidity raises a crucial question: which of them should be prioritized in 2024?
The security of public bonds versus Bitcoin volatility
Brazilian National Treasury bonds, such as IPCA+ Treasury and Selic Treasury, are considered low-risk investments, especially in a scenario of high Selic rate (currently at 10.5% per year, according to the Central Bank). They offer real income above inflation, guaranteed by the federal government, which attracts mainly conservative investors. By June 2024, the volume of public bonds in circulation reached around R$5.8 trillion, according to data from theDirect TreasuresIncrease the confidence of Brazilians in this type of practice.
Bitcoin, which was created in 2009 as a decentralized alternative to the traditional financial system, has a diametrically opposite behavior. By 2024, the cryptocurrency has already recorded an appreciation of more than 60% in the year, surpassing traditional assets such as gold and large corporate stocks. However, its high volatility — with price fluctuations of up to 10% in a single day — requires the investor to be prepared to deal with risks.CoinMarketCapBitcoin reached the $70,000 mark in March 2024, a record high, but fell back to around $65,000 in June, reflecting market uncertainty.
Global liquidity: the risks of sovereign debt and the benefits of decentralization
The liquidity dispute between sovereign bonds and Bitcoin is not exclusive to Brazil.Cointelegraph, in a scenario of high interest rates, governments face difficulties rolling their debts as the costs of issuing new bonds become prohibitive.In the United States, for example, paying public debt interest already consumes more than 10% of the federal budget, according to data from theU.S. Debt Clock.
In contrast, Bitcoin gains space as a reserve of value in times of economic uncertainty. Its limited supply of 21 million units and its independence from central banks make it attractive in countries with devalued currencies or uncontrolled inflation, such as Argentina and Turkey.B3 is, which announced the launch of a Bitcoin ETF in 2024 — signals a paradigm shift.
A lifting ofREUTERSIt revealed that the volume of transactions with Bitcoin in Brazil grew by 45% in the first quarter of 2024 compared to the same period last year.The Bitcoin Market.
Impact on the Brazilian market: what to expect for the coming months?
For Brazilian investors, the decision between allocating funds in public bonds or Bitcoin depends on three main factors: risk profile, investment horizon and financial goals.Cointelegraph Brazil, those seeking security and predictable income should maintain a significant allocation in Treasury bonds. Investors willing to take risks in search of exponential gains may consider a small exposure to cryptocurrencies, something between 2% and 5% of their portfolio.
Another point of attention is regulation. The Central Bank of Brazil (BC) and the Securities Commission (CVM) have made progress in crypto asset regulation, which can increase confidence in the industry. In May 2024, CVM published new guidelines for Bitcoin ETFs, making it easier for institutional investors to access that market.CVMBy June 2024, three Bitcoin ETFs had already been registered in the country, with about R$2 billion in assets under management.
On the other hand, the Brazilian macroeconomic scenario continues to be challenging. The World Bank’s forecast for GDP growth in 2024 is only 1.5%, while gross public debt is expected to exceed 80% of GDP by the end of the year. In this context, diversification becomes even more relevant. Investors who allocate a portion of their resources to Bitcoin may be protected against possible tax crises or currency devaluations.
Diversification is the key
There is no single answer to the question of which asset is better: public bonds or Bitcoin. The choice should take into account the individual profile of each investor. While offering securities security and predictability, Bitcoin represents a bet on a new financial paradigm, with long-term valuation potential. The most prudent recommendation is to diversify: keep most of the assets in conservative applications and reserve a small portion for higher-risk assets, such as cryptocurrencies.
For those who choose to include Bitcoin in their wallet, it is crucial to closely monitor market movements. Asset volatility requires discipline and preferably an investment horizon of more than three years. In addition, it is essential to use regulated exchanges and store the assets in secure wallets, such as cold wallets, to avoid losses from fraud or hackers.
Finally, the present moment is propitious to reflect on how traditional and innovative assets can coexist in a balanced portfolio. Whether by seeking security or by betting on innovation, the important thing is to make informed decisions and align with each one’s financial goals.