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Bitcoin in the wake of record high inflation

The values of cryptocurrencies are rising, but also is the price of everything else in the United States. The curiosity of investors in Bitcoin continues to grow as data shows inflation rose to a 30-year high in the United States. 

The pinch of the inflation will continue to be felt by consumers in the United States and around the world as recent data shows that the Consumer Price Index (CPI) rose 6.2% in October when compared to last year. This development further casts doubt on the claims of the Federal Reserve that the inflation is “transitory”. 

Inflation at 6.2% means that if we keep it steady for 10 years, your $100,000 will become $54,800 by then. Compounding is a powerful force. Satoshi is having somewhere right now. #Bitcoin

— David Marcus (@davidmarcus) November 10, 2021

Due to excessive print of the fiat, traditional financial markets took a hit on November 10. Concerns about runaway inflation and the loss of purchasing power weighed heavily on the minds of investors and major indicies pulled back from new record-highs that were set earlier in the week.

That is in distinction to the worth motion within the cryptocurrency market, the place a burst of bullish momentum sparked a 4.7% rally in within the value of Bitcoin (BTC) because the CPI information was introduced.

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 policies and raise interest rates. Many claim that the central bank has pinned itself in a corner and has no easy options moving forward because a rise in interest rates could make servicing the U.S. national debt even more challenging.

In 2021, the speedy and continuous rise in inflation has resulted to an increasing number of appeals and calls to the Fed to put a stop to its easy-money insurance policies and lift the rates of interest. 

Larry Summers, former U.S. Treasury Secretary recently made a statement. He said:

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

With the management of rates of interest being the first instrument at the disposal of the Fed for exerting influence on the market, it seems that there’s little else moreover continuing to print money that the central financial institution shall be in a position to do in response to ongoing challenges.

The Effect on Fiat and Crypto

These latest developments has uniquely positioned crypto holders to benefit the most, or at least obtain some form of shelter because the declining value of fiat currencies like the dollar has highlighted the power of Bitcoin and other altcoins as hedges against the devaluation and inflation of currencies.

The information from Bitcoin Stimulus shows that Americans who put their $1,200 stimulus check from April 2020 into BTC, would now have $12,172 worth of BTC. An astonishing 914% increase.

These gains were not isolated from the highest cryptocurrency, as the broader market saw an influx of funds that took the total market cap from $ 190 billion to $ 2.95 trillion. during the same period.

As if the increase in value for a large number of tokens on the market was not enough, cryptocurrency holders have also been rewarded with numerous cryptocurrency “stimulus checks” in the form of airdrops like the recent one from Ethereum Name Service, which created a five-figure salary for early users of the protocol. 

Conclusively, people within the cryptocurrency market have benefited generally from the safety supplied by holding assets which can be appreciating in worth as the buying power of fiat currencies deteriorates. And this course has reveal no indicators of slowing down in the nearest future so long the rate of inflation continues to rise.

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