Inflation, yield: are the French increasingly tempted by cryptos?

Slowly, but surely. For the past few months, and the phenomenon has accelerated recently, cryptocurrencies have been picking up. So much so that some are already talking about the return of the Bull Market. But is this really the case?

While it's obviously impossible to say (hello Madame Irma 🔮), it is possible to sound out investor intentions, and that's what we've done. With YouGov, we questioned 1,021 French people (adults, obviously) about cryptocurrencies, what they think of them, and whether or not they might invest in them. The results are quite interesting!

👉 An investment thesis that is taking hold

Without too much surprise, the percentage of French people who say they have invested in cryptocurrencies is roughly equivalent to what has been coming out in studies for the past two years: just under 10% (8% exactly in the survey). According to KPMG's annual study carried out for the digital asset development association (Adan), 9.4% of French people have already invested in cryptocurrencies.

It's a different story, however, when we look at the percentage of French people who say they are "encouraged to invest" in cryptocurrencies. There, the YouGov poll figure rises to 18%, or almost one in five French people. Until now, polls have focused on the "possibility" of investing (26% of the French say they are interested according to the Adan/KPMG study), whereas this time the position seems more affirmative.

A choice favoured by inflation and the low returns on traditional investment products such as Livret A or life insurance products. While these products have the advantage of being guaranteed - all the capital is guaranteed in the case of the Livret A - the returns are still relatively low, especially in the current inflationary climate.

With inflation currently still above 4% on an annual basis, the Livret A and its rate of 3% per annum (capped at 22.950 euros) as well as life insurance policies (uncapped) and their 2% annual return necessarily don't carry much weight.

Only equities could offer a more attractive return, obviously with more risk, but, even then, cryptocurrencies look more attractive. Since the start of the year, the CAC 40 has risen by 15% and the S&P 500 by 20%. By contrast, the bitcoin has more than doubled over the same period (+151%). For its part, ether has risen by 84%.

Interestingly, the percentage of French people who say they will invest in cryptocurrencies is inversely proportional to their age: among the youngest, i.e. those aged 18-24, the proportion rises to 37% while it is just 8% for the over-55s.

👉 An increasingly high-profile topic

The likely launch of a Bitcoin Spot ETF in the US is the narrative that has been driving the ecosystem for many months now and according to our survey, 12% of respondents say they have heard of it.

As a reminder, ETFs (Exchange-Traded Funds) have enjoyed significant success over the past 30 years and have contributed to the democratisation of equities. Some analysts explain that "Spot" ETFs, which are based on real bitcoins (we explain everything here), could have a similar effect on the market to the equity ETFs in the 1990s.

At the other end of the spectrum, several pieces of news have given resonance to the subject of cryptos, but not in a good way. This is obviously the case with the fall of FTX and the trial of its founder, Samuel Bankman-Fried (25%). It's also the case with the fall of NFT. Almost one French person in three (31%) has heard of the subject.

This figure is explained in particular by the fact that the subject of NFTs very quickly reached the general public, with collections as emblematic as that of the Bored Ape. The problem is that many of them, having made great strides, have also gone downhill. A real boon for some mainstream TV commentators 😏.

👉 A bad reputation that sticks

As a logical consequence of the many bad buzz stories, NFTs and cryptocurrencies still have a very bad image overall in public opinion. For 42% of respondents to the survey, cryptocurrencies are first and foremost a "speculative" product, while 39% consider them to be a "fad".

"Today, the crypto universe is fairly easy to criticise because there are as yet no use cases identified by the general public," points out Stanislas Barthélemi, head of blockchain & crypto at KPMG.

Of course, falling share prices and high-profile scandals such as that of FTX have not helped 😅. But if we go further, the sector is still struggling to justify its usefulness to society and will need to go beyond mere promises to drive adoption.

On the other hand, it is still interesting to note that 27% of those surveyed said they thought that in the future, certain financial transactions such as paying salaries or paying in certain shops would be done in cryptocurrencies 👀.

While banks are still very cautious about offering investment solutions to their retail customers, they are making more and more progress on the subjects of tokenisation (read our report here). "It's also a concrete use case that could resonate with the general public," adds Stanislas Barthélemi.

The full study can be foundhere.