Investors have more confidence in cryptocurrencies and non-fungible tokens (NFTs) to give solid returns in 2022 than stocks, new data revealed.
In a poll taken by some 6,000 individuals on LinkedIn over the past couple of weeks, 30% of respondents said a cryptocurrency other than bitcoin (BTC-USD) will yield the best results in terms of investment.
25% said bitcoin and NFTs would be the best investment for 2022, while only 20% believe stocks will outperform the others.
Nigel Green, the founder and CEO of deVere Group, an independent financial advisory company, who ran the survey said the results were “surprising.”
“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,” he said.
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Green said investors are leaning towards digital assets because they predict that markets in 2022 will perform in a similar way to 2021. Cryptocurrencies, despite a slump in December, had a remarkable year.
Bitcoin ended the year up almost 65%. For perspective, the S&P500 (^GSPC) - the benchmark index of the world’s largest economy – was up around 28%, and gold was down roughly 7%.
Another reason could be that rising prices amid supply chain bottlenecks and a shortage of qualified workers 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,” said Green.
He also believes investors are increasingly confident that digital currencies are the “inevitable future of money.”
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The survey also suggests that NFTs are being increasingly perceived as a future-proof asset class. Over the last year many major global sports franchises, fashion brands and household-name artists and musicians have launched NFTS.
Meanwhile the survey showed investors are favouring “other cryptos” over bitcoin, which Green said could mean they are tilting more towards ethereum (ETH-USD).
“Ethereum 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.”
“There’s also massive enthusiasm for the game-changing transition to ETH 2.0 upgrade, which makes the Ethereum network considerably more scalable, sustainable and secure.”
The survey comes as the prices for both bitcoin and ethereum were up on Wednesday.
Ethereum surged 5% to trade at $3,277.
Meanwhile, bitcoin rose 2.8% to trade at $43,068 (£31,594), recovering from losses earlier in the week when it briefly fell below the critical $40,000 mark. It is down about 30% from its all-time high of $69,000.
"The main cause of the recent sell-off has been an aggressive US Federal Reserve, which has moved its timeline for raising interest rates earlier than expected, making risky assets like cryptocurrencies less appealing," said Naeem Aslam, chief market analyst at AvaTrade.
"Furthermore, we can now confidently assert that there is a positive correlation between cryptocurrency prices and broader equity markets. As a result, the recent drop in stock markets has also had an impact on sentiment in crypto markets."
He said there is likely to see volatility in crypto markets over the next few days due to the highly anticipated inflation data.
This is because in November, when inflation reached its highest level in 30 years, bitcoin reached its all-time high.
"Investors began to accumulate more digital coins in order to protect themselves from rising consumer prices. If inflation resumes its rapid rise, bitcoin could potentially surge once more."
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