cryptocurrencies it’s natural to think of them only in terms of themselves and not to consider the other parts of the financial system — including “traditional finance” (or TradFi) and everything else (such as DeFi) — and how that relates to where we are today. However, capital does flow between TradFi and DeFi and macro-equities based on the various phases of the risk cycle we are in.
Recently, BTIG issued a report on a group of U.S.-based food companies that are well-positioned to generate wealth as they expand profit margins. From the perspective of LeoFinance and crypto investors, food companies represent a good “risk-off” play to help offset your crypto positions.
When we see consolidation taking place in the cryptocurrency market, money will typically rotate towards defensive unleveraged income-producing stocks (food, staple, dividend stocks) as an alternative to cryptocurrencies.
Here is how this relates back to macro-economic trends/insights for cryptocurrency investors:
🟢 Capital goes to higher-beta type of asset classes when we are in a bullish crypto cycle (eg: altcoins, meme coins and DeFi projects)
🟡 ARR (not compounded) Used For Capital Rotation into Stocks (Traditional Equities)
🔴 Defensive Assets such as Food, Utilities and Bonds Are Purchased When This Happens
Therefore, food stocks act as stable, cash-flowing “stablecoin” alternatives within the TradFi context.
Mondelez International:
A Multinational Processor of Consumer Packaged Foods
Mondelez International (Debs) is an enormous global CPG company that manufactures a vast array of well-known CPG brands including Oreo & Cadbury chocolates.
When you look at J.M. Smucker and compare it to a stable yield protocol (like the way in which passive investors earn returns in traditional finance), you would expect J.M. Smucker to generate strong cash flows. Their competitive pricing (especially in coffee), combined with being able to return dividends, provides you with similar benefits of an equity investment in an ETP that you can stake on .
Utz Brands
Mid-sized growth investment vehicle emphasizing snack foods.
Crypto comparison: 👉 An equivalent comparison is to compare to a mid-sized out-of-the-main stream coin generating true revenue.
A smaller market capitalisation creating greater growth opportunities.
Greater distribution creates a new "user adoption" curve.
Improving margins offer a tokenomics enhancement (narrative of efficiency).
Higher risk than investing in Mondelez, but with the potential for greater returns.
Portfolio Thinking: TradFi vs Crypto Is Not Either/Or
The vast majority of cryptocurrency-native investors commit the same error.
They assume that all forms of Alpha exist only in the world of Web3.
But what they are missing is this:
Asymmetric upside exist in crypto markets.
Food companies represent a means of preserving capital and compounding stability.
TradFi side = stability and predictable cash-flow (food equity, ETFs).
Key Insight Into Rotation Strategy
When analyzing capital flows:
BTC increases→altcoin season→greater risk-taking potential
Market peaks→increased volatility →capital flee from cryptocurrency
The capital does not go poof—it just rotates into equities such as these
Therefore, the analysis of traditional finance (TradFi) is very much still relevant, even with an emphasis on cryptocurrency.
💡 Last Thought on Alpha:
BTIG does not just cover food stocks, but rather, where does capital hide if there is an increase in uncertainty?
To LeoFinance readers:
Crypto creates generational wealth
Traditional finance protects generational wealth
Prudent investors understand both areas of investment will rotate at some point.
At any given point, the market is simply the flow of liquidity through the use of economic narratives.