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Japan has seen its CPI surge to 3.1% in April, the highest rate since 1991. The nation’s central bank is planning on doubling the inflation target by 2020 if this trend continues and investors are understandably wary of putting their savings into Japan with such high rates of inflation impacting them so heavily after just one month. Investors have been scrambling to invest in US Dollar-denominated assets regardless of what that means for Bitcoin itself but may soon see a shift back towards stability as global economic uncertainty clears up slightly following Brexit.
The “bitcoin vs inflation chart” is an interesting graph that shows the relationship between bitcoin and inflation. The graph has a record-high amount of data, which makes it easy to see how bitcoin compares to other currencies.
Consumers in the United States and around the world are still feeling the effects of inflation, with recent data showing that the Consumer Price Index (CPI) rose 6.2 percent in October compared to the same month last year, casting further doubt on the Federal Reserve’s “transitory” inflation narrative.
With inflation of 6.2 percent, your $100,000 will be worth $54,800 in ten years if nothing changes. Compounding has a lot of power. Right now, Satoshi is having a good time someplace. pic.twitter.com/THtshLF1Y0 #Bitcoin
November 10, 2021 — David Marcus (@davidmarcus)
Traditional financial markets took a blow as a consequence of the high print on November 10 as investors worried about out-of-control inflation and the loss of buying power, and key indices pulled back from fresh record highs established earlier in the week.
In contrast, a surge of positive momentum in the cryptocurrency market spurred a 4.7 percent increase in the price of Bitcoin (BTC) shortly after the CPI data was released.
4-hour chart of BTC/USDT. TradingView is the source of this information.
With the fast spike in inflation expected in 2021, more people are calling for the Fed to abandon its easy-money policies and hike interest rates. Many believe the Fed has backed itself into a box and has no simple alternatives going ahead since an increase in interest rates will make repaying the US national debt much more difficult.
According to former US Treasury Secretary Larry Summers’ latest statements:
“For the next several years, global financial markets seem to be forecasting weak growth and low real interest rates, undermining central banks’ capacity to manage economies.”
With interest rate management as the major instrument at the Fed’s disposal for influencing the market, it seems that the central bank will be limited in what it can do in response to continued issues other than continue to create money.
It’s bad for fiat money, but it’s excellent for cryptocurrency.
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, cryptocurrency holders are uniquely positioned to benefit from, or at least receive some protection from, these recent developments.
According to Bitcoin Stimulus, an American who invested their $1,200 stimulus check in BTC in April 2020 would currently have $12,172 in BTC. This marks a 914 percent gain.
The $1,200 stimulus check’s current value as of April 15, 2020. Bitcoin Stimulus is the source of this information.
And those increases aren’t limited to the top cryptocurrency; the whole market has experienced a flood of assets, bringing the overall market capitalization from $190 billion to $2.95 trillion in the same time frame.
Market capitalization of all cryptocurrencies. CoinMarketCap is the source of this information.
Aside from the increased value of many tokens on the market, cryptocurrency holders have also been rewarded with numerous cryptocurrency “stimulus checks” in the form of airdrops, such as the recent one from Ethereum Name Service, which resulted in a five-figure payout for early adopters of the protocol.
Overall, cryptocurrency market players have profited from the security provided by owning assets that are increasing in value while the buying power of fiat currencies declines, a process that shows no indications of slowing down in the near future if the rate of inflation continues to grow.
The author’s thoughts and opinions are completely his or her own and do not necessarily represent those of Cointelegraph.com. Every investing and trading choice has risk, so do your homework before making a decision.
Bitcoin is not a hedge against inflation. The price of Bitcoin has been rising as the world’s top central banks have been printing money like crazy. Reference: bitcoin is not a hedge against inflation.
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