Record inflation prompts investors to fixate on Bitcoin

Consumers in the United States and around the world continue to feel the pinch of inflation and Recent data shows that the Consumer Price Index (CPI) increased 6.2% in October compared to last year, a fact that further casts doubt on the narrative of the “transitory” inflation coming out of the Federal Reserve.

As a result of the high money printing, traditional financial markets took a hit on November 10, as concerns about rampant inflation and loss of purchasing power weighed heavily on investors’ minds and major indices fell back from the new all-time highs set earlier in the week.

That contrasts with price action in the cryptocurrency market, where an explosion of bullish momentum triggered a 4.7% rally in the price of Bitcoin (BTC) just as the CPI data was announced.

4-hour chart of the BTC / USDT pair. Source: TradingView

The rapid rise in inflation over the course of 2021 has led to an increasing number of calls from the Fed for it to end its easy money policies and raise interest rates. Many claim that the central bank has been cornered and does not have easy options for moving forward because an increase in interest rates could make servicing the US national debt even more challenging.

According to recent statements by the former United States Secretary of the Treasury, Larry Summers:

“Global financial markets appear to be anticipating slow growth and truly low interest rates for the next few years, which will weaken the ability of central banks to steer economies.”

Since controlling interest rates is the main tool at the Fed’s disposal to exert influence in the market, There appears to be little more to keep printing money that the central bank will be able to do in response to current challenges.

Bad for fiat, good for crypto

Cryptocurrency holders are in a unique position to benefit, or at least receive some shelter from these latest developments because the declining value of fiat currencies like the dollar has highlighted the power 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 Stimulus Check Value of $ 1,200 as of April 15, 2020 Source: Bitcoin Stimulus

And those gains have not been isolated in the main cryptocurrency. because The entire market has seen an influx of funds that raised the total market capitalization from $ 190 billion to $ 2.95 trillion during the same period.

Total capitalization of the cryptocurrency market. Source: CoinMarketCap

In addition to the increase in the value of a large number of tokens on the market, cryptocurrency holders have also been rewarded with numerous cryptocurrency “stimulus checks” in the form of airdrops. like the recent Ethereum Name Service that created a five-figure payday for early adopters of the protocol.

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

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Each investment and trade movement involves a risk, you must carry out your own research when making a decision.

Keep reading:

  • Cryptocurrency markets rise as US inflation reaches its highest level in 30 years
  • Nov 10 Price Analysis: BTC, ETH, BNB, ADA, SOL, XRP, DOT, DOGE, SHIB, LUNA
  • Bitcoin hits new all-time high after gaining $ 2,000 in minutes
  • Billionaire Investor Carl Icahn Believes Bitcoin May Be The Best Hedge Against Inflation
  • US Debt Limit Crisis: A Catalyst For Cryptocurrencies To Ditch From Traditional Assets?
  • Bitcoin and inflation: what is the relationship?
  • The City of Philadelphia Launches Its Own Blockchain Initiative

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Helen Hernandez is our best writer. Helen writes about social news and celebrity gossip. She loves watching movies since childhood. Email: Phone : +1 281-333-2229

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