As Inflation Looms, Americans are “Pouring” Cash, Stimulus Checks Into Gold and Bitcoins
The Bitcoin revolution has slowly but surely taken the financial world by storm, with the cryptocurrency currently topping $11,000 dollars and more and more young investors seeking to make investments.
Earlier this week, U.S. bank JP Morgan said that younger investors were “likely to choose Bitcoin” as an investment over gold while a report last week stated that Americans are now investing “excess” cash into cryptocurrencies as an investment into the technologies.
Economic uncertainty is fueling a surge in crypto investments during times of economic uncertainty, a report from Cryptoslate.com said.
Lower interest rates are also tempting some Americans to forgo safety and to pour their savings into assets such as stocks and Bitcoin, Bloomberg said recently.
Meanwhile, traditional stores of value, such as low-interest bank accounts, are losing relevance due to the potential for massive returns in the crypto market as investments continue to grow.
While many personal-finance subreddits and Facebook groups have urged people to invest extra cash in high-yield savings accounts, rates on those have fallen steadily for the past year, the report said.
Additionally Ally and Marcus, the consumer arm of Goldman Sachs, gave investors rates of only 1% and 1.05% in July (all the while, DeFi projects like Yearn Finance boasted 1,000%) resembling.
Both have fallen from last year’s 2% interest after the Fed cut rates for the first time since 2008.
As inflation continues to loom, assets like Bitcoin and gold are yielding far bigger returns, while Ethereum, Chainlink, and some DeFi tokens are giving back a minimum of 300% according to the report.
The upside is not fully realized either, the report stated. While Americans remain confident about the market, only 28% of surveyed respondents chose the stock market as their top choice for long term investments, while 18% chose cash-based investments and a smaller number chose cryptocurrencies.
Young People Spurring Dramatic Cryptocurrency Surge
On Wednesday, a report from JP Morgan analyst Nikolaaos Panigirtzoglou said that younger investors are becoming increasingly interested in alternative assets, such as Bitcoin.
Milennials are embracing stocks like technology shares, while older people are selling equities.
Bonds are the favored instrument for excess liquidity for the older generation.
With both Gold and Bitcoin EFTs (defined as an investment vehicle that tracks the performance of a particular asset or group of assets) experiencing massive amounts of cashflow over the past five months with people looking to invest during the ongoing coronavirus pandemic, both old and young are staking their claim for the importance of an “alternative” currency, JP Morgan’s Nikolaos stated.
Despite the growing consensus, older generations are not exactly warming up to the venerable Bitcoin, however.
Investing legend Paul Tudor Jones for example said his $22 billion Tudor Investments firm holds over 1% of total assets in Bitcoin futures. But considering the current economic climate of over-inflation and excessive money printing, crypto seems like a natural move going forward for anyone seeking to diversify their assets in a climate where inflation and excessive money printing is looking like more and more of a problem with each passing month.