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90% of crypto enthusiasts expecting inflation to be a real problem

By Shannon Williams, 02 Aug 2021

As many as 90% of crypto enthusiasts have been anticipating and worrying about price rises, with new research showing inflation is expected to be a real problem.

A survey of an independent panel of 1010 crypto enthusiasts commissioned by crypto platform Gemini found that 79% of respondents believe inflation will become a significant issue 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 be the reason that investors are flocking to 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%zrA43 of respondents – as the least likely to lose value over time during periods of inflation. Nine per cent of investors chose commodities such as gold, silver and energy.

“As an asset in limited supply, fast growing cryptocurrencies such as Bitcoin can be a strong inflation hedge against devaluing fiat currencies," says Jeremy Ng, Asia-Pacific Managing Director of Gemini.

"For this reason, we find many investors hold crypto such as Bitcoin, rather than using them as a means of payment," he says.

Ng says some investors do get nervous about the volatility of Bitcoin, but it is to be 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," he says.

"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 been partnering with fund management companies, asset managers, and semi-institutional investors since it started.

“Institutional investors entering the market will help to dampen Bitcoin’s price swings," Ng says.

For investors who are nervous about Bitcoin price movements, however, he recommends they only invest the amount they are comfortable with.

“It is telling that 10 per cent more investors prefer crypto to gold, silver and other commodities," he says.

"I regard Bitcoin as gold 2.0 as both assets share many similar characteristics. The reason it is 2.0 is because Bitcoin trumps gold in many aspects such as scarcity, storage cost, portability and divisibility”.

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