Crypto’s big six months
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2021 has been a breakout year for cryptocurrencies. It has seen all-time highs, far greater acceptance by institutional investors and the entire nation of El Salvador was treated to a powerpoint presentation on cryptocurrencies by president Nayib Bukele ahead of the nation officially adopting it as legal tender.
Closer to home, our own research with YouGov has shown cryptocurrencies starting to gain serious traction in Australia.
Survey results indicate four million Aussies are likely to buy crypto in the next 12 months. This shouldn’t be too surprising any more – the chances are you know someone in your immediate circle of family and friends who already has purchased a digital asset.
Our research indicates that as many as one in five has dipped their toes into the cryptocurrency waters at some point in the last year.
The big questions now are why and what’s next?
The why is different for each demographic. In Australia, millennials and younger investors appear to be hopeful that cryptocurrencies will be one way to outpace the housing market and pull together that first deposit.
But older generations and institutional investors are looking for longer-term results on their investments, especially at a time of low interest rates, low rental yields and all-time high equity valuations.
What comes next is fascinating. Methods of earning a return on your crypto investments such as Staking will start to become more popular.
Staking is an innovation in decentralised finance (DeFi) that lets you ‘delegate’ your cryptocurrency to an exchange, so the exchange can use it to validate new cryptocurrency tokens using yours.
In return for locking away your crypto for this purpose, you’ll get a percentage return of the value you’ve put aside for staking as a reward.
It’s one of those crypto-only processes that puts your assets to work safely, in ways other asset classes really can’t replicate. Somewhere between a rental property and an equity? It’s difficult to find a good analogy for this one! Which is why mass adoption and growing awareness are so powerful.
There’s also the question of cryptocurrencies becoming payment methods. Whilst short-lived, Tesla’s dabble in bitcoin payments is a sign of things to come.
And as the user base broadens, more businesses will look to tap into the enormous store of wealth there.
It will start at the high end — big ticket items such as a house in Isle of Capri, electric cars or a ticket to the moon — before confidence in pricing mainstream items builds.
You just might not be buying any of those things from Elon anytime soon.
This article was developed in collaboration with Kraken, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.