Long-Term BTC has Outperformed Inflation by Magnitudes

Inflation across the world is not a great news for risk assets.  Market liquidity gets drained as people are forced to tighten their spending.

We have heard this many times, perhaps different versions of this idea: “Bitcoin is a hedge against Government Mistakes. In reality – it is also a hedge against inflation long term. And inflation is the reason for why we need Bitcoin.”

However, the important question that arises in the minds of the investor is:  If BTC is a hedge against inflation, why does it sink as inflation increases? Still don’t get that.

Community Reaction:  I think long term we will see that it does prove to hedge against inflation. Short term and speculative traders have the immediate impact and are less educated on fundamentals.

I think it is because of the lack of mass adoption. Otherwise it checks all the requirements to be a non-inflationary coin.

A really high inflation is good for all hard assets technically but what screws that up is the federal reserve. They will hike rates and do quantitative tightening (QT) which sucks liquidity or $ from the market which is the opposite of quantitative easing QE which prints money and has generally low interest rates at the time.

In a QE environment, stocks go up assets go up and big players buy up assets because the dollar is loosing value. Now with QT, the dollar actually gains value as there is less of it every day while QT is happening.

If the $ goes up then everything against it naturally goes down (unless someone is buying the asset regardless) and since BTC is considered a risk asset, they dump btc first and hard. In a QT environment the dollar is king.

Speculation based on macro-economic outlook is yet another reason for BTC sinking.

People think a recession is coming or worse so the fear drives them to sell as markets don’t like uncertainty. Also to add on increased rate hikes: most of the % moves we see in crypto are retail who market buy. Since most retail don’t have much money and a lot of debt.

And there is no such thing as a short-term inflation hedge. Long-Term BTC has outperformed inflation by magnitudes. Long-term trends are your friend not short-term speculation. Look at gold, also down.

Well, if there is 21 million Bitcoin, and there is halving coming up, and there are 8 billion people on the planet, and about 1% of that billion holds the majority of the wealth.  Who do you think will own majority of the bitcoin?