Record high inflation prompts investors to scrutinize Bitcoin – Community News
Stimulus Check

Record high inflation prompts investors to scrutinize Bitcoin

Consumers in the United States and around the world continue to feel inflation and recent data shows that the consumer price index (CPI) rose 6.2% in October compared to last year, a development that further fuels “transient” demand. doubted. inflation story coming out of the Federal Reserve.

High pressures hit traditional financial markets on Nov. 10 as concerns over runaway inflation and loss of purchasing power weighed on investors’ minds and key indices retreated from new record highs earlier in the week. .

That contrasts with the price action in the cryptocurrency market, where a burst of bullish momentum led to a 4.7% rise in the price of Bitcoin (BTC), exactly as the CPI data announced.

BTC/USDT 4-hour chart. Source: TradingView

The rapid rise in inflation over the course of 2021 has led to an increasing number of calls for the Fed to end its easy-money policy and raise interest rates. Many argue that the central bank has cornered itself and has no easy options to move forward, because a rise in interest rates could make paying off the US government debt even more difficult.

According to recent statements by former US Treasury Secretary Larry Summers:

“Global financial markets appear to be anticipating slow growth and low real interest rates in the coming years, which will undermine central banks’ ability to steer economies.”

Since interest rate control is the Fed’s main tool to influence the market, it appears that the central bank has no choice but to continue printing money in response to the ongoing challenges.

Bad for fiat, good for crypto

Cryptocurrency holders are in a unique position to take advantage of, or at least gain some shelter from, these latest developments, as the declining value of fiat currencies like the dollar has highlighted the strength of Bitcoin and other altcoins as hedges against currency devaluation and inflation.

According to data from Bitcoin Stimulus, Americans who put their April 2020 $1,200 stimulus check into BTC would now have $12,172 worth of BTC. This represents an increase of 914%.

Current Value of the $1,200 Incentive Check dated April 15, 2020. Source: Bitcoin Stimulus

And those gains are not isolated to the best cryptocurrency, as the entire market has seen an influx of funds that has increased its total market cap from $190 billion to $2.95 trillion over the same period.

Total market cap for cryptocurrency. Source: CoinMarketCap

On top of the appreciation for a large number of tokens in the market, cryptocurrency holders have also been rewarded with numerous cryptocurrency “stimulus checks” in the form of airdrops such as the recent Ethereum Name Service that created a five-digit payday for early adopters of the protocol. .

In general, participants in the cryptocurrency market have benefited from the protection offered by holding assets that rise in value as the purchasing power of fiat currencies deteriorates, a process that shows no sign of slowing down in the foreseeable future if inflation continues to rise get up.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risks, you should do your own research when making a decision.