According to a new study from a Swiss bank, NFTs are stores of value that can protect assets from crises. Depending on the material, collectible digital assets are in addition to other objects that can help protect capital.
The entire world is going through a phase of great concern about the economy, as inflation rates have skyrocketed in several countries. In the last days, The Central Bank of the United States has once again raised interest rates sharplyin an attempt to contain the loss of purchasing power of people.
The result of inflation is felt in various ways, the most common being the general increase in prices in industry and services. However, there is also the so-called reduplication, in which the products begin to lose quality or are reduced in size and the price remains the same.
To protect themselves from this phenomenon, many turn to non-traditional assets that are supposed to protect the purchasing power of investors.
“NFTs are a store of value,” say Credit Suisse and Deloite
In a study signed by the president of Credit Suisse, Axel P. Lehmann, created in partnership with the Luxembourg arm of the “Big Four” Deloite, the Swiss investment bank explores the issue of store of value amid financial crisis and the war that devastates Europe again.
According to the study, which deals with collectibles in general, the sector is favored by high interest rates in the countries, although it should slow down in 2022 compared to 2021.
“As inflation is likely to remain high and interest rates are likely to rise, we do not expect similar positive wealth effects in collectibles as in 2021 and anticipate slower returns in 2022 than the prior year overall. We found that Chanel handbags, traditional Chinese artwork, and wristwatches offer the best protection against inflation, while fine wines, modern and contemporary art, and American and Latin American art tend to suffer under high-price regimes. inflation”.
In the case of NFTs, these are types of certificates registered in the block chain, which determine the ownership of art. Even so, it is common for these arts to be exhibited in digital galleries and exchanged between collectors, with the open sea platform.
The study indicates that, despite the high volatility of the NFT sector, still young, the trend is for it to stabilize in the long term, mainly with the exchange of money between generations, leaving the baby boomers for generations more akin to digital collectibles. .
Finally, the study shows that difficult international relations may lead the NFT sector to experience growth in the coming years, further aided by the rise in the metaverse segment, making this technology a candidate for a store of value.
“Tougher international relations after the current Russia-Ukraine crisis could also speed up and improve digital business and transactions, leading to a spread of NFTs.”
Risks and volatility
The study by Credit Suisse and Deloite makes it clear that the NFT industry it is still young and, because it is linked to the cryptocurrency sector, it still makes the prices of collectibles very volatile, which is one of the biggest risks in the sector.
In addition, there are the regulatory risks of this technology, which are not yet well known to investors. The taxation of NFTs would be another problem for fans of the industry as it can raise issues.
In any case, this was the first Credit Suisse study to point to the relationship of NFT technology to the store of value issue in the midst of a crisis.