After inflation hit a record high in 40 years…what will be the role of bitcoin?
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Answer After inflation hit a record high in 40 years…what will be the role of bitcoin?
Inflation is raging and the US Federal Reserve is trying to curb it.
As we touched on earlier on Arab Bitcoin, Bitcoin was affected positively, contrary to what was expected after the US Federal Reserve’s announcement of interest rates.
Last month, a torrent of new inflationary pressures on consumer prices moved the inflation gauge to its highest level in 40 years.
The PCE price index that tracks the 12-month inflation rate rose to 6.8% in June.
This is the highest dollar inflation rate that consumers have experienced since the Volcker regime in 1982.Read:Hackers warn and threaten the founder of “Terra”…details here
Inflation rising to June significantly exceeded Expectations Wall Street.
Additionally, the Bureau of Labor Statistics’ CPI inflation gauge registered 9.1% in June.
The Federal Reserve has created, loaned, and spent trillions of new dollars over the past two years.
All this new money is chasing fewer goods and services as GDP fell during the first and second quarters.
Meanwhile, the Fed raised interest rates in another attempt to crush inflation.
Investors are looking for a haven as prices rise:
Inflation was already out of control in April, when informed The company “Fatherly” released the results of a survey that found that 99% of American households have changed their spending procedures due to rising prices.
reported CNN’s “Parija Kavilanz” says consumers have cut back on non-essential spending.
While she told Forbes that people are eating less and switching to brands that offer affordable goods and services.
Mutual fund managers and retirees are also looking for ways to beat the cash bubble of this cycle.Read:Bitcoin Takes Over as an Alternative Amid Talks About Credit Suisse Bank Collapse
A survey by the Global Atlantic Financial Group of retirement age investors found that 3 out of 5 respondents see hedging against dollar inflation as a challenge this year.
While Bitcoin investors see it as a way to hedge against inflation since its inception, the outlook for it continues to this day.
But not everyone sees it the same way.
In May, Fortune’s Taylor Lock presented a report from Bank of America analysts who argued that Bitcoin is a risk asset, not a way to hedge against inflation.
Bitcoin Price Rise When Inflation Was At Its Worst:
Bitcoin bounced from the $17,000-$20,000 range and continued to current levels at $23,300 (at the time of publication) Short term .
Is it just a coincidence with rising prices and increasing inflation, or are there other influential factors? Or is higher inflation causing bitcoin prices to go up?
Historically, the price of a currency has followed an increase in prices.
Taking a quick look at the Bitcoin price chart in the last 10 years along with the annual inflation rate, we will notice that there is a noticeable positive relationship between the price of Bitcoin and inflation.Read:The former CTO of Huobi announces the launch of a new global platform
The above correlation shows that Gresham’s law still works clearly in the money markets. The law states that inflation takes the company’s money out of circulation and turns it into savings.
Dasa: Low-income investors sold most of their cryptocurrency holdings during the market crash
Bitcoin balance on cryptocurrency exchanges drops sharply
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