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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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

A man clenches his fists with glee having seen the share price go up on the computer screen in front of him.
Cryptocurrencies

Why did the Bitcoin price just rocket to another all-time high?

At new record highs, Bitcoin now has a market cap of almost US$1.8 trillion.

Read more »

Bitcoin coin with a rising arrow.
Cryptocurrencies

Why cryptocurrencies like Bitcoin and Ethereum are shooting for the moon today

Crypto investors just sent the Bitcoin price to new all-time highs. But why?

Read more »

A man with his head on his head because of the falling cryptocurrency prices on the screen.
Cryptocurrencies

What's happening with the Bitcoin price amid the stock market volatility?

Bitcoin investors have been on a wild ride in August.

Read more »

bitcoin coins falling
Cryptocurrencies

Think the ASX has been volatile this week? Wait until you see the Bitcoin price

Bitcoin has had the volatility of a yo-yo over the past week...

Read more »

A businessman carrying a briefcase looks at a square peg or block sinking into a round hole.
Technology Shares

Is this the real reason Block stock is down 11% in a week?

Block's big drop this week might have an unusual culprit...

Read more »

Bitcoin ETF digital illustration.
Cryptocurrencies

Bitcoin ETF hits the ASX. Here's what you need to know

History is being written on the ASX today as it welcomes its first Bitcoin ETF.

Read more »

Concept image of Bitcoin and hand using laptop.
Cryptocurrencies

Buying Bitcoin? Here's why Block's Jack Dorsey says AI will drive global adoption

Moving forward, Block plans to reinvest some of its monthly profits into Bitcoin.

Read more »

A man holding a mobile phone walks past some buildings
Cryptocurrencies

The Betashares Crypto Innovators ETF (CRYP) is up 37% in a month. Is it too late to buy?

Looking at the CRYP ETF? Here's my take on whether it's too late to buy.

Read more »