While inflation figures in Australia have remained relatively low during the pandemic, Consumer Price Index (CPI) for the June quarter 2021 saw an increase of 0.8%, taking the 2021 increase to 3.8%. This brings the topic to the fore of our discussions about our performance.
While expectations are that the CPI will dip back to normal levels, a new survey shows that 90% of crypto enthusiasts have been anticipating and worrying about price rises for some time.
Findings of the Gemini survey of crypto enthusiasts
A survey of 1010 crypto enthusiasts commissioned by Gemini found that 79% of respondents believe inflation will become a real problem in Australia over the next five years.
More than half (51%) believe inflation is already here, and 41% believe it is on its way due to multiple factors, such as the increase of money through quantitative easing alongside lockdowns and restrictions, and the knock-on effect on supply chains.
This concern may explain investors flocking property, crypto and shares. More than four in five (85%) believe investing in appreciating assets will be a good idea during periods of inflation.
Respondents were also asked to choose the safest investment, from seven types of investment, if inflation were to continue. With recent property auction price results defying expectations, it’s no wonder that property is popular, chosen by 41% of respondents.
Cryptocurrencies and shares came in equal second – each chosen by 19 % of respondents – as the least likely to lose value over time during periods of inflation.
9% of investors chose commodities such as gold, silver and energy.
Comments on Gemini’s survey of crypto enthusiasts
Jeremy Ng, APAC MD of Gemini says, “As an asset in limited supply, fast growing crypto currencies such as Bitcoin can be a strong inflation hedge against devaluing fiat currencies.”
“We find many investors holding crypto such as Bitcoin, rather than using them for payments.”
Jeremy says some investors are nervous about the volatility of Bitcoin, which is expected for a relatively new asset class, “Bitcoin is still maturing while climbing exponentially.”
“Bitcoin, most notably, has had the highest average return across all asset classes in the last decade. At an average annualised return rate of over 200%, Bitcoin’s average return is over 10 times that of Nasdaq-100 index which was the second ranked asset class.”
Apart from a growing volume of retail investors, Gemini has partnered with fund and asset companies plus semi-institutional investors, offering AUD onramp since 2020.
Jeremy says, “Institutional investors entering the market will dampen Bitcoin’s price swings.”
However, for potential crypto investors who are nervous about Bitcoin price movements, he recommends they only invest the amount they are comfortable with.
He adds, “It is telling that 10% more investors prefer crypto to gold, silver and other commodities. I regard Bitcoin as gold 2.0 as both assets share many similar characteristics.”
“Bitcoin trumps gold in many aspects such as scarcity, storage cost, portability and divisibility.”