Bitcoin, other cryptocurrencies and NFTs are more trusted than stocks to give investors better returns in 2022, according to a recent survey on a business networking platform.
The poll taken by almost 6,000 individuals on LinkedIn – and tracked by more than 146,600 – since the beginning of the new year finds that 30% of respondents believe that ‘another cryptocurrency’ (other than Bitcoin) will yield the best results; 25% say Bitcoin and NFTs (non-fungible tokens); and 20% believe stocks will outperform the others.
Nigel Green, the founder and CEO of deVere Group, a leading financial advisory and fintech, who ran the survey said the results were “surprising” and that he was “taken aback”.
“Stocks, which have always traditionally made up the bulk of successful investors’ portfolios, are falling out of favour as a way to create and build wealth, with digital assets taking over.
“Also, it’s believed by investors that ‘other’ cryptocurrencies – and not the headline-grabbing, dominant Bitcoin – will outrun other asset classes this year in terms of returns.”
The deVere boss said there could be three key explanations.
“First, investors are predicting that the markets in 2022 will perform in a similar way to 2021. That’s to say that cryptocurrencies, even despite the slump in December, had a remarkable year.
“Bitcoin ended the year up almost 65%, meanwhile, the S&P500 – the benchmark index of the world’s largest economy – managed around 28%, and gold was down around 7%.”
“However, past performance is no guarantee of future returns, of course.”
Inflation a setback
He continued: “Second, rising prices as supply chain bottlenecks and a shortage of qualified workers continues to push inflation, which is a major concern for investors as their spending power is being eroded.”
Bitcoin and other digital currencies are widely regarded as a shield against inflation mainly because of its limited supply, which is not influenced by its price, Green said.
“And third, critically, investors are increasingly confident that digital currencies are the inevitable future of money. In our increasingly tech-driven, globalised world, it makes sense to hold digital, borderless, decentralised currencies and/or other digital assets, such as NFTs.”
Bitcoin might have been pushed down the ranking below ‘another cryptocurrency’ due to growing investor insight into the crypto market.
“More and more people understand the intricacies of crypto,” Green noted.
“When the respondents cited that they believe ‘another cryptocurrency’ would produce better results in 2022 over Bitcoin, they were probably thinking of its main rival, Ethereum.
Ethereum for smart contracts
“Ether has a higher level of real-use potential as Ethereum – the platform on which it is the native cryptocurrency – is the most in-demand development platform for smart contracts, thereby highlighting that network’s value not only as a platform for developers but as a worldwide financial utility.
He continued: “There’s also massive enthusiasm for the game-changing transition to ETH 2.0, which makes the Ethereum network considerably more scalable, sustainable and secure. These upgrades represent a major boost not just for Ethereum but for blockchain technology itself.”
The survey also suggests that NFTs are being increasingly perceived as a future-proof asset class.
NFTs are digital collectibles that are encoded onto a blockchain – the same technology on which cryptocurrencies run – creating a unique digital watermark showing ownership and the digital rights to that collectible.
Over the last year many major global sports franchises, fashion brands and household-name artists and musicians have launched NFTS.
A long-time and high-profile tech advocate, deVere’s Green reaffirms that portfolio diversification “remains the best way for an investor to seize opportunities and mitigate risks.”
“This poll may be just a snapshot of sentiment, but it signals that investors are ready to embrace future-focused digital assets that they believe will continue to outperform other assets in 2022,” he concluded.