Bitget TradFi 101: A practical guide to hedging against currency devaluation and inflation
In many regions, persistent economic uncertainty has become a part of everyday life. The steady erosion of purchasing power from inflation, combined with the constant pressure of currency devaluation, is a major concern for users. In this environment, finding effective tools to protect your wealth against inflation is a necessity. Bitget TradFi, which is built on MetaTrader 5, is a cross-market trading platform that allows users to trade a wide range of traditional financial assets using USDT as margin, including forex, indices, gold, oil, and stock CFDs. For users navigating volatile economic conditions, it offers a powerful all-in-one solution—particularly for those focused on forex and stock index markets. This article is part of the Bitget TradFi 101 series.
1. Forex or stock indices: Which is the better hedge against inflation?
Local currencies tend to weaken due to domestic economic policies, commodity price fluctuations, or a strong U.S. dollar. Inflation often accelerates alongside this currency depreciation. To preserve wealth, investors commonly turn to "hard assets" or U.S. dollar–denominated assets.
1.1 The forex hedge (especially USD pairs)
● Currency pairs such as EUR/USD, USD/BRL, or USD/MXN directly reflect the strength of the U.S. dollar against other currencies.
● When local inflation is high or further currency depreciation is expected, going long on USD/BRL or USD/MXN (effectively buying USD and selling the local currency) can serve as a direct hedge. This approach helps offset the loss of purchasing power caused by local currency weakness.
● The forex market operates 24 hours a day, offers deep liquidity, and supports leverage of up to 500x (available on Bitget TradFi), making it well-suited for flexible short- to medium-term trading strategies.
● In high-inflation environments, the U.S. dollar often acts as a safe-haven currency. Historical examples from countries such as Venezuela and Argentina show that holding dollar-denominated assets has preserved wealth far more effectively than holding local-currency deposits.
1.2 The stock index hedge (focused on U.S. indices and other global indices)
● Common underlying assets include CFDs on major U.S. stock indices such as the US500 (S&P 500), NAS100 (Nasdaq 100), and US30 (Dow Jones), as well as other global indices like the AUS200.
● Over the long term, U.S. stock indices represent economic growth, with historical annualized returns of around 7–10%. Even after adjusting for inflation, returns have remained positive. In inflationary environments, companies typically pass higher costs on to consumers, giving equities—especially broad indices—a degree of inflation resistance.
● However, short-term volatility can be significant. Stock indices are heavily influenced by Federal Reserve policy, technology sector cycles, and global risk sentiment. In a stagflation scenario, U.S. stock indices may experience sharp drawdowns, making them a less reliable hedge than directly holding long USD positions.
1.3 A quick comparison
| Dimension | Forex (USD pairs) | Stock indices (primarily U.S. stocks) | Recommendation |
| Inflation hedging stability | High (direct hedge against domestic currency depreciation) | Moderate (long-term inflation resistance, short-term pullback risk) | Forex is preferred during periods of high inflation and rapid currency depreciation |
| Short-term flexibility | Extremely high (24/7 trading, high leverage) | High (but more dependent on macro sentiment) | Short-term wealth protection → Forex |
| Long-term appreciation potential | Low (primarily for capital preservation) | High (corporate growth + dividends) | Seeking both preservation and appreciation → Stock indices |
| Capital efficiency | Extremely high (up to 500x leverage) | High (with similarly substantial leverage) | Both are suitable for users with limited capital |
Conclusion:
● If your primary goal is to quickly and effectively protect your wealth from local currency devaluation and inflation, forex is the more suitable choice, as it responds faster and more directly.
● If you can tolerate a certain level of volatility and aim for long-term growth while hedging against inflation, U.S. stock indices offer greater advantages, particularly during periods of global economic recovery or positive technology cycles.
Many experienced investors combine both approaches, using forex for short-term tactical defense and stock indices for medium- to long-term strategic allocation.
2. Bitget TradFi: A portal to both the U.S. dollar and stocks
Traditionally, monitoring and trading both the forex market and U.S. stock indices required multiple platforms—one for forex and another for stocks or futures. This setup was fragmented, slow, and costly due to transfers and currency conversions.
Bitget TradFi changes this entirely:
● Unified multi-asset account: One Bitget account, one MT5 sub-account, funded with USDT as margin. Instantly access crypto, forex (EURUSD, USD/BRL, etc.), stock indices (US500, NAS100, etc.), gold, and oil—without multiple transfers or fiat conversion barriers.
● Real-time multi-chart monitoring: View charts for the U.S. dollar index, EUR/USD, USD/BRL, and the US500 on a single screen in the Bitget app or MT5 terminal. This makes it easy to analyze correlations in real time. Typically, a stronger U.S. dollar can put pressure on U.S. equities, although technology stocks may still rise during favorable sector cycles.
● Maximum capital efficiency: USDT serves directly as your trading margin, while the platform handles the conversion between USDT and USD seamlessly, saving time and transaction fees. With standard leverage available (up to 500x for forex and indices), even users with modest capital can implement diversified strategies efficiently.
● 24/7 responsiveness: Cryptocurrency and traditional markets operate across complementary time zones. This allows positions to be adjusted instantly during periods of U.S. dollar or stock market volatility, significantly improving responsiveness to global macroeconomic developments.
Practical tips:
1. Pair USD/BRL or USD/MXN with the US500: The former helps hedge against local currency depreciation, while the latter captures U.S. economic growth.
2. Increase long USD exposure during dollar-strength cycles: This typically occurs during periods of Federal Reserve hawkishness or rising risk aversion.
3. Increase long exposure to U.S. stock indices when risk appetite improves: Often associated with easing global liquidity conditions.
4. Leverage MT5's powerful technical tools (80+ indicators): Monitor correlation changes between the U.S. dollar index and U.S. equities more effectively.
Conclusion
Bitget TradFi functions as a global asset management hub designed for crypto-native users. It enables seamless access to traditional financial markets, helping users hedge against inflation, diversify assets, and participate in global growth—without leaving the crypto ecosystem. If inflation and currency depreciation are key concerns, Bitget TradFi provides the tools to take control: access the U.S. dollar, U.S. equities, and global opportunities directly with USDT.
Risk warning: This content is for reference only and does not constitute investment advice. Margin trading carries significant risk and may result in the loss of your capital. Assess your risk tolerance carefully and follow strict risk management.
