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Is Bitcoin (BTC) an inflation hedge?

The inflation rate is rising in developed countries, and especially in the U.S., it seems a big problem, but Bitcoin may be the solution. The idea of Bitcoin as an inflation hedge isn’t something new. An inflation hedge is an investment that helps people protect themselves from declining purchase power.

In simple terms, you buy and hold something that keeps its value against the inflation rate. Commodities like gold have always been good inflation hedges, but it seems Bitcoin is finding its place here, too.

Disrupting the investment strategies

The inflation rate is becoming a big problem in many countries. In the U.S. alone, it looks like a feelable challenge for many people. Heather Long, the Washington Post economist, believes the rates are becoming worrying in that country.

She tweeted:

“BREAKING: U.S. inflation was up 6.2% in October over a year ago. That’s the highest inflation in 31 years. Inflation was up 0.9% in Oct. alone, a much higher increase than 0.4% in Sept. and 0.3% in August. Prices are rising for food, energy, shelter, used cars, and new cars.”

In situations like this, people look for valuable commodities to hold and protect their money from declining purchase power. Bitcoin can be one of the good commodities and act as a very suitable inflation hedge. If you look at the last year’s record in BTC/USDT chart, you can easily see the power of Bitcoin.

In the last weeks, we say Bitcoin is recording ATHs in the price chart and attracting more buyers. So, the idea of Bitcoin as an inflation hedge can become a reality soon.

Lucas Outumuru, the head of research at IntoTheBlock, believes the thesis is strengthening. He compares the Bitcoin price to the U.S. inflation rate:

“$BTC hit a new all-time high around $69k following the release of U.S. inflation reaching the highest in 30 years.”

Bitcoin long-term holders somehow benefit from their holdings all the time. No matter the country, this commodity has always performed better than others and even stocks. In developing countries, many people buy USD or other stable fiat currencies to protect the value of their holdings. It seems Bitcoin can now be the next choice, even in the developed countries with stable economics like the United States.

After all, Bitcoin and other cryptocurrencies are always prone to volatility. It means you shouldn’t consider them as short-term investments. But the idea of buying cryptocurrencies – especially major ones like Bitcoin and Ethereum – for protecting declining purchase power is strengthening and can help many people around the world.

Mehdi Zare
I am a young father who always loves to learn. Security and privacy topics are my main interests, and so, blockchain as one of the most strong security and privacy solutions of the modern industry excites me too.
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