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Generating Returns in the Crypto Winter

Crypto’s Bad Year: As of this writing, the global cryptocurrency market is down over 63%, or around $1.48 trillion dollars since the start of the year. Bitcoin, the dominant crypto asset, alone saw a 64% decrease YTD, as other tokens — Ethereum, stablecoins, and the thousands of “altcoins” —  followed suit.

Unlike investments in FTX, Luna, or any of the many crypto-related incidents from this year, cash withdrawn from crypto markets are not disappearing into thin air. They are being converted into fiat currency and stored elsewhere, often at a loss.

  • Stocks remain a less attractive and undesirable option for crypto traders, especially with the public market’s recent entry into bear market territory.
  • The subsequent rise of the federal fund rate did boost savings accounts’ earning potential, but but not enough to outpace some bond yields.
  • With the near-total collapse of several stablecoins and many newer investors’ aversion to the older generation’s affinity for gold as a store of value, the search for yield and returns outside of an FDIC-insured bank account remains elusive for millions.

Private Credit Investments as a Salve

Instead of keeping capital in an account earning low or no interest, private credit investments offer investors the opportunity to earn high-yield interest over short terms. This allows for the chance to earn returns even in a down market and regardless of volatility in crypto and stocks.

Why another investment? Keeping cash in an account paying low yields generates low returns. By investing in private credit, investors could generate as much as 18% annualized returns while retaining the option for liquidity every few months.

  • This can grow capital even as crypto continues to fall, giving investors access to their capital once an investment matures to either reinvest in private credit or move it to another asset class of their choice (like crypto, in the case of a potential “bottom” or rebound).
  • Private credit often moves uncorrelated from other markets. Though major economic movements can impact private credit deals, the volatility in crypto or stocks often remains separate from movements in private credit. This can allow private credit investments to flourish even in an economic downturn.
  • There is no “one flavor” of private credit in the same way that there is not one single cryptocurrency. Investors can diversify across different private credit asset classes like litigation financing, corporate debt investing, and small/medium business investments.

Managing Potential Risks: Private credit investments, like all investments, are not without risks. Investors are never guaranteed returns, and should an underlying asset default, it could mean the partial or total loss of a principal investment and/or interest.

  • Private credit platforms perform due diligence to provide investors a wealth of information to learn more about their investment, underlying assets, and potential risks associated with the investment.
  • Some private credit platforms (like Percent) offer surveillance reports, which give investors regular updates on the performance of all factors related to the investment.
  • In the same way someone would read a whitepaper on a token or project before investing, investors should always perform their due diligence with this data.

Invest in Private Credit on Percent

Percent gives investors exclusive access to private credit investments on their terms. Get up to 20% APY with durations as short as one month.

Put your crypto earnings to work — even during crypto winter — and start investing with Percent today.

Sign up and make your first investment

Our diverse set of investment offerings target annualized returns of up to 20%.