What to Invest If the Market Crashes in 2025? A Practical Playbook for Crypto, RWAs, and Traditional Assets

Overview

Market crashes aren’t one-size-fits-all. Outcomes depend on what triggers the drawdown: recession/deflation, inflation shock, or a liquidity/credit event. This guide maps each scenario to assets that historically hold up best, how to hedge with crypto and RWAs, and a rules-based plan to deploy capital before, during, and after a selloff.

TL;DR positioning ideas (educational, not financial advice)

• Safety and dry powder: short-term Treasuries/T-bills (or tokenized T-bills), high-quality money market funds, USD/stablecoins with diversified custody.
• Inflation hedge: physical gold or tokenized gold, TIPS, broad commodities.
• Liquidity/volatility hedge: long volatility (VIX calls), put options, partially short index futures/perps.
• Opportunistic risk: staged buys in BTC/ETH, quality equities, and select RWAs once panic indicators peak and breadth stabilizes.

Crash scenario map

Crash trigger	What usually happens	Assets that tend to help	What to be careful with
Deflationary recession	Yields fall, credit spreads widen, earnings drop	Long-duration Treasuries, investment-grade bonds, gold, defensive equities; later: quality growth	Highly levered cyclicals; small caps early in the drawdown
Inflation shock	Yields rise, real incomes squeezed	Gold, commodities (oil/copper), TIPS, short-duration bills, value/energy	Long-duration bonds; unprofitable growth
Liquidity/credit event	USD spikes, everything correlates to 1	Cash/T-bills, USD, long volatility, tactical shorts; tokenized T-bills on-chain	Carry trades, altcoins with thin liquidity

Crypto and RWA toolset you can actually use

• Cash and near-cash: Short-term Treasuries/T-bills (1–6 months) or tokenized T-bills (RWA).
• Stablecoins: Diversify across issuers/custody; monitor depeg risk.
• Inflation hedges: Gold (physical, ETFs, tokenized), TIPS, broad commodities.
• Volatility and downside hedges: Index puts, VIX calls, short futures/perps; crypto protective puts or short perps.
• Opportunistic risk: DCA or staged buys in BTC/ETH, quality equities, tokenized RWAs.

Signals to watch before deploying risk

• Credit stress and spreads.
• Volatility washout (VIX behavior).
• Market structure (indexes, breadth).
• Liquidity (DXY, stablecoin/ETF inflows).
• Crypto-specific signals (funding rates, on-chain flows).

A simple, rules-based crash plan

Pre-crash (now)

• Build safety bucket: 6–12 months runway in short T-bills/tokenized T-bills.
• Add structural hedges: 5–10% gold; small rolling puts or VIX calls; define max hedge budget.
• Set staggered buy limits at 10%, 20%, 30% below current levels.
• Position sizing rule: risk ≤1% equity per trade; use ATR-based stops.

During the crash

• Avoid averaging down blindly; buy after confirmation signals.
• Rotate to cash-generative, low-debt names; avoid thin liquidity alts.
• Use hedges tactically; roll winners, avoid over-hedging.

After the panic

• Reduce hedges as breadth improves; DCA into beta.
• Rebalance to targets (Gold 7%, T-bills 20–30%, core equity/crypto).
• Consider factor shifts from defensives to cyclicals/small caps.

Example allocations to consider testing (non-advice, illustrative)

Scenario	Allocation
Defensive tilt	30% T-bills/tokenized T-bills, 10% Gold, 10% TIPS, 20% Global defensives, 15% BTC/ETH, 10% Long vol, 5% Cash
Inflation-shock tilt	25% T-bills, 12% Gold, 10% Broad commodities, 10% TIPS, 18% Quality value equities, 15% BTC/ETH, 10% Hedges

How to implement (step-by-step)

• Set up portfolio buckets: Safety, Hedge, Risk, Opportunity.
• Automate DCA schedules and GTC laddered buys.
• Use alerts for credit spreads, DXY, VIX, 200-day MA.
• Hedge discipline: cap hedge spend, roll on schedule, size for drawdown buffering.
• Recordkeeping: track entries, signal/reason, exit criteria.

Crypto-specific crash tactics

• Basis trades: long spot BTC/ETH, short perp for funding.
• Stablecoin diversification: across issuers/chains; custody vs exchange wallets.
• On-chain yield with caution: prioritize short-duration, transparent RWAs.

Common mistakes to avoid

• Going all-in early; crashes have multiple legs.
• Fading strong trends without confirmation.
• Concentrating stablecoins or RWAs with one custodian.
• Ignoring currency risk; USD spikes can hurt non-USD portfolios.
• Letting hedges lapse as volatility rises.

FAQs

• Should I sell at first -10%? Rarely wise; build rules-based hedge/buy framework instead.
• Is gold guaranteed to rise in a crash? No, but it historically holds value, especially as real yields fall.
• What about long bonds? Helpful in recessions with falling yields; hurt in inflation shocks.
• Is crypto a hedge? Crypto drops with risk assets in liquidity panics; recovers strongly in easing liquidity.