Why inflation angst is driving more Aussie investors to Bitcoin

Bond yields are ticking higher, stoking renewed inflation fears.

| More on:
bitcoin piggybank

Image source: Getty Images

Bitcoin (CRYPTO: BTC) hasn’t been immune to the global selloff in equities.

Bitcoin is down 2.2% over the past 24 hours, currently trading for US$41,320 (AU$57,388).

Ethereum (CRYTPO: ETH), the world’s number 2 crypto by market value, is sliding as well.

One Ether is currently worth US$2,846, down 3.5% since this time yesterday.

And it’s not just Bitcoin and Ether. All of the top-10 cryptos by market cap are in the red over the past 24 hours, according to data from CoinMarketCap.

This, as the S&P/ASX 200 Index (ASX: XJO) follows US equity markets sharply lower, with investors fretting about the US Federal Government hitting its debt ceiling and sharply rising commodity prices fuelling renewed inflation fears.

And it’s this inflationary angst that could end up supporting the Bitcoin price.

That’s according to a new survey, which reveals more Aussie investors are looking to cryptos as a hedge against a potentially sinking dollar.

What did Gemini’s crypto survey reveal?

Global crypto platform Gemini commissioned a survey of 1,010 Australians who have invested in cryptos.

Chief among the results was that 59% of respondents believe cryptocurrencies will offer better long-term growth potential than the Aussie dollar. Meaning if inflation fears kick in, more investors may turn to Bitcoin and other leading digital tokens.

Not surprisingly, cryptocurrencies remain more popular with younger investors than older investors. 72% of 25–34-year-olds said they believe cryptos are a valuable asset in a diversified portfolio, compared to 57% of those over 55.

Some issues holding respondents back from investing more in cryptos are lack of regulation and lack of information. 32% of the surveyed panel who don’t currently invest said they will invest more when cryptocurrencies are regulated. 34% said they’d up their investments when they have more information about crypto markets.

As for gold, gold bugs rest easy. Only 8% of respondents thought cryptos were a better investment than gold.

And, with the resurgent price, 51% of respondents believe it’s too late to invest in Bitcoin.

Bitcoin has experienced “meteoric growth”

Commenting on the survey results, Jeremy Ng, Gemini’s Asia-Pacific managing director said:

Both cryptocurrency and gold are often seen as ways to hedge against inflation. Gold has historically been considered a safe-haven asset. However, Bitcoin and several other cryptocurrencies have experienced meteoric growth and offer unique, innovative features that make them stand out.

Some cryptocurrencies have the potential to benefit investors by creating tools and resources that support the growth and exchange of value outside of traditional financial institutions, without the need for an intermediary. The blockchain technology that underlies crypto can be applied to a large range of industries, beyond simply money and finance.

Jeremy isn’t being hyperbolic when he says there’s been meteoric growth in the crypto world.

According to Gemini’s release, the total crypto market cap in September 2020 was roughly AU$529 billion. As of September 2021, it stood at AU$2.9 trillion

However, Jeremy added these words of caution to would be Bitcoin and crypto investors:

The cryptocurrency space is still in its early stages and is therefore subject to much more volatility than the traditional asset classes like the stock market. As a result, it is possible for individuals to see short-term losses.

In other words, do your homework before making any investments. And never invest more than you’re prepared to lose.

Should you invest $1,000 in Bitcoin right now?

Before you consider Bitcoin, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Bitcoin wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Cryptocurrencies

Cryptocurrencies

Crypto venture firm’s lessons after $10 million haircut on LUNA losses

What can investors learn from the collapse of LUNA? Here's one research team's take...

Read more »

Clock with post it as a reminder of Tax Time
Cryptocurrencies

Own crypto or NFTs? Here’s why the ATO could have you in their sights come tax time

More than a million Aussies are estimated to have transacted in digital currencies and NFTs this year.

Read more »

woman examining ethereum price
Cryptocurrencies

Why is the Ethereum price down 48% this year?

Higher interest rates increase the appeal of safer investment assets like bonds and cash deposits.

Read more »

a man sitting at a computer at a desk has a look of anguish and trepidation on his face as he opens his eyes wide and made an aargh type expression with his mouth as his hair stands on end and his tie also stands on end with one part over each shoulder in what is supposed to be a humorous picture of something in a panic.
Cryptocurrencies

Un-stable coin? Terra crypto woes continue with another 31% fall

I'd think very carefully before going bargain hunting among stumbling altcoins.

Read more »

Concept image of Bitcoin and hand using laptop.
Cryptocurrencies

Using Bitcoin to diversify your portfolio? Read this

Cryptos have been rising and falling largely in line with other risk assets.

Read more »

Smiling ASX investor holding a gold bitcoin.
Cryptocurrencies

Good riddance to meme speculators ditching Bitcoin: expert

The exit of 'get rich quick' investors from crypto is a boon for serious long-term holders, says DeVere Group boss…

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Cryptocurrencies

Can regulators prevent another US$45 billion crypto stablecoin meltdown?

Terra's LUNA token, meant to help its UST token remain pegged to the US dollar, has lost 99.99% of its…

Read more »

A man looks down with fright as he falls towards the ground.
Cryptocurrencies

Is the Bitcoin price heading all the way back down to US$20,000?

Last week's meltdown of UST and its backing crypto LUNA sent most every crypto tumbling lower.

Read more »