We are in uncharted territory. Global stocks are plummeting, crypto is bleeding, and the US dollar is losing ground against major currencies like the Euro and Yen. On 3 April 2025, Reuters reported that the USD sank to six-month lows, driven by fears over President Donald Trump’s new tariffs. These “harsher-than-expected” tariffs have affected markets, sinking equities and pushing investors toward safer assets like bonds and gold — but even those aren’t offering the growth investors prefer.

The trigger? Trump’s announcement of a 10% baseline tariff on all US imports, with higher duties on major trading partners. This has sparked fears of a global trade war, higher inflation, and slowing economic growth. Ray Dalio, in his 2 April 2025 X post, warned that tariffs are “stagflationary for the world as a whole,” meaning they can drive up prices while slowing growth — a toxic mix for markets. Add to that the risk of retaliation from trade partners and the outlook grows even murkier.

In past downturns, the playbook was clear: shift capital into the US dollar, government bonds, or defensive stocks. But this time, the USD is faltering and stocks are in freefall. So, where does capital go now? More importantly, how can investors not just survive but thrive in this chaotic environment?

Historically, the US dollar has been the go-to refuge during economic uncertainty. But as Dalio notes, the dollar’s status as the world’s reserve currency — while a privilege — has been “abused” through over-borrowing, leading to unsustainable debt levels. This over-reliance is now backfiring. The USD’s recent drop signals a deeper issue: global confidence in US economic policies is wavering.

Here’s a breakdown of the current crisis.

• Stocks Are Tanking: Fears of higher corporate costs from tariffs and weaker global demand are dragging down equities. Reuters noted that global stock markets tumbled as investors braced for a potential recession.

• Crypto is… Struggling: Bitcoin and other cryptocurrencies are being treated as risk assets, not hedges, with prices falling alongside stocks. A study from the National Center for Biotechnology Information (NCBI) states that while Bitcoin can hedge inflation, it fails as a safe haven during financial uncertainty, declining in response to market shocks.

• Gold and Bonds Are Rising (Barely): Gold and bonds have seen inflows as safe havens, but their growth potential is limited. According to Marko Vidrih, tokenised gold, for instance, has surpassed $1.8 billion in market cap, but its 2024 return of 27.2% pales in comparison to Bitcoin’s historical upside.

• Cash is Eroding: Holding cash might feel safe, but with inflation looming — exacerbated by tariffs — its real value is shrinking fast. Dalio highlights that tariffs are “more inflationary for the importer,” meaning US consumers could face higher prices.

Investors are caught in a dilemma: traditional safe havens are either underperforming or too risky, leaving them searching for new strategies to protect and grow their capital.

If traditional assets are failing, how can investors position themselves to not just survive but generate returns? The answer lies in rethinking capital allocation and embracing alternative strategies that thrive in volatility.

Here are three actionable approaches, backed by data and expert insights.

Traditional finance is struggling, but DeFi is stepping up with innovative solutions. RWA lending protocols are offering stable, attractive yields even in turbulent markets. According to RWA.xyz, the total borrowing volume of RWA lending protocols reached $4.4 billion, peaking at $1.4 billion in May 2022. Fast forward to 2024, and the tokenised RWA market hit $186 billion, a 32% increase in the first three quarters alone.

DeFi strategies like liquidity provision and yield farming are enabling investors to earn consistent returns by leveraging market inefficiencies — think AMM pools or dual investment strategies that generate yield regardless of price direction

Market-neutral strategies allow investors to profit without betting on market direction, a tactic that’s gaining traction in this environment. Market-neutral funds often outperform other strategies during high volatility, as they focus on mitigating market risk. Moreover, market-neutral strategies thrive in such uncertainty by focusing on relative price movements rather than absolute gains.

While Bitcoin has not yet proven itself as an immediate hedge, its long-term potential remains strong. In 2024, Bitcoin outperformed gold with higher global market returns, despite gold’s impressive 27.2% gain. If inflation fears intensify, BTC could decouple from stocks and trade more like a digital gold.

The big question remains: where will capital flow in the coming months? Here are some scenarios to watch.

• Bitcoin as a Long-Term Hedge: If inflation continues to rise, Bitcoin could see a renewed safe-haven narrative. Dalio’s point about the US dollar’s over-borrowing suggests that confidence in fiat currencies might erode further, potentially driving demand for BTC .

• Stablecoin Adoption Surge: If trust in the USD declines, stablecoins like Dai or USDC could see a global adoption boom. MakerDAO’s integration of RWAs into stablecoin lending is already paving the way.

• Tokenised RWAs as the New Frontier: Institutions fleeing traditional markets are increasingly turning to tokenised RWAs. BlackRock CEO Larry Fink has called tokenisation a more valuable use of blockchain than even Bitcoin, a trend that’s accelerating with the RWA market’s $186 billion valuation in 2024.

• The 0DTE Options Rush and Structured Income Products: As markets grow more volatile, investors are flocking to structured income products like 0DTE (zero days to expiry) options to capitalise on intraday price swings. According to Cboe, February 2025 saw record-breaking S&P 500 options trading, with average daily volumes hitting 3.49 million contracts — 56% of which were 0DTE, a new high. While some warn that 0DTE trading could amplify market volatility, others see it as a way to generate consistent income in uncertain times. Robinhood’s CFO Jason Warnick reported that index options trading, including 0DTE, contributed $15 million to annualised trading revenue, with strong week-over-week growth.

The financial world is undergoing a seismic shift. The traditional “safe” assets — USD, bonds, defensive stocks — no longer guarantee safety, and investors must rethink how they deploy capital. The winners in 2025 and beyond will be those who embrace innovation: leveraging DeFi for yield, using market-neutral strategies to navigate volatility, and allocating to non-traditional assets like tokenised RWAs and commodities. The question isn’t just where money will go — it’s how investors will play this game differently in a world where the rules are being rewritten.

What’s your next move? Are you sticking with the old safe havens, or are you ready to explore other strategies?

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