iStock-1357555272.jpg

Investors raise a glass to fine wine as Crypto crashes

iStock-1357555272.jpg

Wine investments are in ‘rude health’ as the cryptocurrency market enters intensive care.

Commentators are likening the current turmoil in the crypto-currency sector to the 2007-08 financial crisis. A bubble that could be compared to the Dot.com mega-burst in 2000 has erased a total US$2trillion value off the market since its latest peak in November 2021. Private, corporate and even country investors have seen their holdings wiped out.

The catalyst for much of this started with Terra’s UST stable coin losing its peg to the US dollar in May this year. This led to its associated crypto coin Lunar seeing a devastating plunge of 99% in value and a broader market sell off. Commentator, Coindesk compared this event to the ‘Bear Stearn’s effect on the financial markets in 2008. These events do not happen in isolation and Celsius Network followed, and comparative to Lehman Brothers, has had a pan-market effect. Celisius’ customers have had their accounts frozen and can neither withdraw or move funds.

Bitcoin, the world’s most traded cryptocurrency has seen its value fall from US$69,000 in 2021 to lower than US$20,000 recently. Questions are now being asked about the future of Bitcoin and the crypto market as a whole. Key protagonists are calling for regulation of a space with over 19,000 currencies in existence.

How do wine investments compare to cryptocurrency?

Tangible, stable, low-risk asset fine wine is 'real', finite and profitable. Wine investments are maintaining stronger growth than traditional inflation hedges; gold and property, in the current environment. In 2022 to date to 31st May, the fine wine investment market has seen an average growth of 10.3%. Burgundy wines have led the market with an average 22.3% rise in prices. Over the last year the broader fine wine market has risen 25.6% and Burgundy an impressive 50.3%, just topping Champagne's average 49.4%. (Data: Liv-ex.com, June 2022)

With increasing unpredictability in financial and commodity markets, investors need to consider alternative assets to diversify their portfolios and protect cash from rising inflation and recession, fine wine is an important option for diversification.

For the latest wine investment performance information see our June 2022 Market Report and speak to one of our specialist wine portfolio managers on 0203 384 2262.