Investors Take Refuge In Bitcoin As Inflation Rises
14 Diciembre 2021 - 11:00AM
NEWSBTC
Inflation rates have been rising for some time now. This is
attributed to the indiscriminate printing of fiat money by the Fed
and has been a growing concern to investors, especially those
investing for the long term. United States inflation rates have now
risen to 7% as Biden’s administration continues to be rocked by
inflation concerns. This high growth rate has led investors to look
for ways to hedge for inflation. Now, gold has always been the
standard inflation hedge. It has dominated the market for decades,
and for thousands of years of human civilization, it has been the
agreed-upon store of value. However, investors have begun to flee
gold as its returns have dropped significantly below the inflation
rate, making it an unsuitable hedge. Inflation Rates Skyrocket
Express reported that inflation rates have now outpaced wages in
recent times. This has been a growing trend and has now come to a
head with US inflation rates clocking 7%. Former US presidential
candidate Bernie Sanders had expressed concern for this rate which
he said has seen younger generations having a lower standard of
living compared to the older generations. Related Reading | Bullish
For Bitcoin: US Inflation Expectation Breaks Out From Decade Long
Downtrend Sanders noted that inflation had driven the prices of
housing and cost of college higher by 72% and 163% respectively
compared to 20 years ago. This was unacceptable for the American
politician who stated that “The time for action is now.” Bitcoin Is
Saving The Day While lawmakers have focused on how inflation is
affecting the economy and standard of living, investors have turned
their focus on protecting their assets from inflation. Even when
investors make a profit from their investments, if the inflation
rate is higher than their percentage of return, then they are
losing money. It is this concern that has pushed investors more
towards bitcoin. For starters, while the inflation rate is
currently 7% in the US, the year-over-year return for bitcoin had
been more than 140%. Gold still appears at the top of the list for
most traditional investors, but bitcoin is quickly becoming the
preferred choice. Bitcoin has beaten gold since its inception
| Source: XAUBTC on TradingView.com Compared to gold, the
S&P, and Nasdaq, bitcoin has consistently blown it out of the
park in terms of returns. The asset itself is deflationary given
that it is capped at 21 million coins ever. Since governments or
entities are not able to print it out of thin air, it retains its
value, which increases instead of decreases due to inflation.
Related Reading | Internet Searches For ‘Bitcoin’ Explode Amid
Inflation Fears Institutional investors have also increasingly
taken to the digital asset to hedge for inflation. Responding to a
video clip from Fox News that highlight the high inflation rates
rocking the country, Michael Taylor, CEO of MicroStrategy, replied
that “Inflation is the problem and Bitcoin is the solution.”
Featured image from iStockPhoto, Charts from TradingView.com
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