Bitcoin, other cryptocurrencies and NFTs are more trusted than stocks to give investors better returns in 2022, suggests a poll of close to 6,000 people on business networking site LinkedIn.
The poll, conducted over the past two weeks, finds 30 per cent of respondents believe a cryptocurrency other than Bitcoin will yield the best results, whilst 25 per cent say Bitcoin and NFTs will. Only 20 per cent believe stocks will outperform the others.
Nigel Green, the founder and CEO of deVere Group, organized the survey and said he was surprised by the results.
“Stocks, which have always traditionally made up the bulk of successful investors’ portfolios, are falling out of favour it seems as a way to create and build wealth, with digital assets taking over,” Green said. “Also, it’s surprising that it’s believed by investors that ‘other’ cryptocurrencies – and not the headline-grabbing, dominant Bitcoin – will out-run other asset class this year in terms of returns.”
Green believes there could be three key explanations for the findings. The first is investors expect the markets to perform similar in 2022 as they did in 2021, when cryptocurrencies performed rather well.
“Bitcoin ended the year up almost 65 per cent, meanwhile, the S&P500 – the benchmark index of the world’s largest economy – managed around 28 per cent, and gold was down around seven per cent,” Green noted.
The second factor are rising prices due to supply chain disruptions, Green posits. That and a labour shortage are pushing inflation and eroding spending power. Some digital currencies are seen as a shield against inflation due to their limited supply, which is not influenced by price.
The third, and most telling factor, is investors see digital currency as the future of money, Green said.
“In our increasingly tech-driven, globalized world, it makes sense to hold digital, borderless, decentralized currencies and/or other digital assets, such as NFTs.”
Bitcoin’s drag may be due to increased investor sophistication, Green believes. They know the markets better, along with the strengths of individual cryptos. One, Ethereum, is the most in demand for smart contracts, giving it global utility. The coming transition to ETH 2.0, which includes more network scalability, will only help.
“These upgrades represent a major boost not just for Ethereum but for blockchain technology itself,” Green said.
The survey also suggests 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.