For many years, the Bitcoin (BTC) narrative has portrayed the digital asset as a hedge against monetary inflation. This is due to rising inflation across the board in the last couple of years, thanks in large part to governments squeezing huge amounts of their domestic paper money to counter the economic devastation caused by the COVID-19 pandemic.
In comparison, President Biden’s stimulus plan has increased the total US debt relief to $ 5 trillion since the outbreak of the virus last year. Another way to visualize the size of these figures is to consider that in 2020 the Federal Reserve alone issued more than 40% of the total current US dollar.
And while it may be speculated that such astonishing data may have worked for Bitcoin to further consolidate its position as a concrete long-term value store in the eyes of many around the world, a recent report by crypto-analyst firm Chainalysis seems to suggest that BTC did not can be a hedge against inflation, as declared much first. In this regard, Chainalysis study leader Kim Grauer noted:
“At the moment, we can not show a statistically significant relationship between US inflation and bitcoin prices, but we know that many people invest in bitcoin as an inflation hedge.”
But this is not the end of the discussion.
It is not carved in stone
Inflation figures are still a hot topic of debate, as evidenced by the fact that earlier this year in June the personal consumption index, which serves as a leading indicator of the purchasing power of the US population, showed that inflation is currently the highest. levels over ten years.
So to better understand whether the value of BTC as a hedge against inflation may disappear, the Cointelegraph spoke with Bobby Zagota, CEO of the US cryptocurrency exchange Bitstamp, who stated that “Bitcoin and cryptocurrencies as a whole asset class have grown beyond Discuss it. is just insurance against inflation. ”
Matt Losinsky, CEO of the multi-purpose market NFT HooDooi.com, told Cointelegraph that due to the economic structure that underlies traditional banking, there is no doubt that Bitcoin is a good long-term safekeeping, adding:
“It [bitcoin] provides greater value, stability and security than any centralized currency / asset backed by the government. There is no doubt that it is early users who mainly control the market in terms of price movements, but over time this will eventually stabilize. “As the supply continues to grow, decentralization is in the hands of more and more people.”
However, he acknowledged that in order for digital assets to become more visible as a store of value or hedging, the cryptocurrency market as a whole must mature. “[Bitcoin] is on the right track and going in the right direction. In my opinion, this is a long-term game,”
A closer look at the argument against hedging
Iqbal Gundham, vice president of transactions and payments at Ledger, told the Cointelegraph that in light of the current situation, he does not believe the average investor views bitcoin as his main effort against domestic fiat dilution.
However, there is a good chance that such a narrative will change fundamentally, but it may take at least several years: “For [BTC] to become a long-term value store, it must match inflation and reduce price volatility. This will only happen when adoption increases and the price reaches a new standard. ”
Anton Bokov, co-founder of the 1-inch Decentralized Exchange Aggregation Network, provides a more comprehensive view of this issue. the future of the industry as a whole.
But with a growing army of random users and seemingly institutional investors entering the fray, Bokov believes there is strong reason to believe that Bitcoin will undoubtedly serve as an SOV in the eyes of many in the future:
“After almost 13 years, Bitcoin has become an integral part of the modern world. I believe that BTC will retain its status as ‘digital gold.’ can ever be recovered, so to me it seems almost impossible for him to lose his identity as a value. ”
It’s about long-term play
According to Nicholas Merten, CEO of the financial platform Digifox and founder of the YouTube channel DataDash, one of the many mistakes most people make when criticizing the concept of saving bitcoin is that they expect immediate results.