- High budget deficits and ongoing inflation have raised the value of bitcoin, demonstrating its strength as a store of value.
- Bitcoin is a preferred inflation hedge because of its benefits over gold, which include its capped supply and simplicity of transfer.
In the face of ongoing inflation and significant budget deficits in the US, Bitcoin has proven to be a strong store of value that is rivaling more established assets like gold.
The managing director of research at Grayscale, Zach Pandl, emphasized the appeal of cryptocurrencies in the face of economic difficulties, speculating that the circumstances would strengthen Bitcoin’s reputation with investors.
Due to inflation being so widely present, the Federal Reserve has insisted on retaining high interest rates. Despite such a situation, the cryptocurrency market has remained remarkably resilient, thanks to Bitcoin.
The latest price of Bitcoin is, according to CoinMarketCap, at about $70,835.18, up 2.63% in the last 24 hours and 7% on the previous week.
Bitcoin Halving: A Growth Accelerator
It is anticipated that the impending April 20 Bitcoin halving event would increase the value of Bitcoin even further. In the past, halving events—in which the incentive for mining fresh blocks is cut in half—have caused notable price increases. A bullish environment for Bitcoin is created by this, increasing economic growth, and the use of cryptocurrencies.
More people are realizing how much more valuable Bitcoin is as a store of value than conventional gold. Its simplicity of transfer, divisibility, capped supply expansion, and simple verification method highlight its advantages, in line with what ETHNews previously disclosed.
These qualities set Bitcoin apart from gold as a preferable inflation hedge, especially after ten years of solid performance. To explore this development in more depth, you can watch the YouTube video below.
The Two Edges of Monetary Policy and Inflation
In March, higher inflation rates in life would mean an extended period of high inflation, And that may deter the Federal Reserve from doing so cutting interest rates. According to Greg Daco, chief economist at Ernst & Young, if inflation goes even higher, then “decision makers must adopt a ‘higher-for-longer’ monetary policy”.
Interest Rates and Crypto Volatility
Bonds and term deposits may attract investors due to the recent rise in the 10-year real interest rate, a macroeconomic measure. The desire for Bitcoin as a reliable future asset persists despite market swings.
From historical statistics, we can see that falling 10-year real interest rates tend to result in falling bitcoin prices.
But there was something of a 28% drop in the value of Bitcoin from December 2017 to January 2018 Unusually However, Bitcoin’s natural advantages and its position in the contemporary economy make the future look bright.
Meanwhile, in an environment where inflation soars and fiscal crises continue, Bitcoin is poised for an unprecedented surge, with experts saying its price might hit $100,000.
A mixture of falling trust in traditional financial institutions, made worse by high inflation and permanent budget deficits, is promoting the price of alternative assets.