While inflation figures in Australia have remained relatively low during the pandemic, today’s Consumer Price Index (CPI) for the June quarter 2021 – an increase of 0.8%, taking the 2021 financial year increase to 3.8% – will bring the topic to the fore of our discussions about our economic performance. While expectations are that the CPI will dip back to normal levels, a new survey indicates that as many as 90 per cent of crypto enthusiasts have been anticipating and worrying about price rises – and perhaps for some time.
A survey of an independent panel of 1010 crypto enthusiasts commissioned by leading crypto platform Gemini found that 79 per cent of respondents believe inflation will become a real problem in Australia over the next five years.
More than half (51 per cent) believe inflation is already here, and 41 per cent 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 per cent) 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 per cent of respondents. Cryptocurrencies and shares came in equal second – each chosen by 19 per cent 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.
Jeremy Ng, Asia-Pacific Managing Director of Gemini, says: “As an asset in limited supply, fast growing cryptocurrencies such as Bitcoin can be a strong inflation hedge against devaluing fiat currencies. For this reason, we find many investors hold crypto such as Bitcoin, rather than using them as a means of payment.”
Jeremy 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. 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, offering AUD onramp in mid-2020. Jeremy says: “Institutional investors entering the market will help to dampen Bitcoin’s price swings.” For investors who are nervous about Bitcoin price movements, however, he recommends they only invest the amount they are comfortable with.
He adds: “It is telling that 10 per cent more investors prefer crypto to gold, silver and other commodities. 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”.
About Gemini in Australia
Gemini (gemini.com) is a world-leading exchange platform that enables individuals and institutions to securely buy, sell, store and earn cryptocurrencies. Available in more than 50 countries, Gemini offers a full suite of accredited products for new and advanced investors, including a web trading platform, mobile app and active trading interface. Created with customer security as a priority, Gemini is the world’s first crypto exchange to obtain SOC 1 Type 2 and SOC 2 Type 2 certification, and has more than $AUD 258 million in insurance coverage, the largest amount purchased by any crypto custodian in the world. Visit https://www.gemini.com/apac/australia
 Respondents comprised 55% of people who invest in crypto and 45% who have invested in crypto.