Bitcoin flirts with $ 69,000 on the heels of rising inflation news | Crypto News

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Proponents of Bitcoin have long argued that the world’s most valuable cryptocurrency can act as a hedge for inflation.
Who Bloomberg
Posted on November 10, 2021
Bitcoin hit another record and is flirting with $ 69,000 after first arguing that inflation data is a hedge against rising pressure on cryptocurrency costs.
The largest digital asset at market value rose 1.9% on Wednesday to $ 68,991, surpassing the high set in New York trading last Monday night. Other currencies also rose, with the Bloomberg Galaxy Crypto Index, which tracks major cryptocurrencies, gaining 2.4% from its highest level since May.
The rise in the token can be explained, at least in part, by the basic argument – which has gained momentum in recent months – that Bitcoin could act as an inflation hedge. Proponents of the crypto say that unlike the dollar or any other traditional currency, the digital currency is designed to have a limited supply, so it cannot be devalued by a government or central bank that distributes it too much.
“Bitcoin continues to enjoy a rally that accelerated from August to September and October,” said Sui Chung, CEO of CF Benchmarks, the administrator of cryptocurrency references. The final part of his rally began in October with the expectation of launching a Bitcoin-futures ETF, but “it seems to be fueled by the persistent inflation we are seeing in every major world economy.”
Prices from food to gas to housing have risen faster and have been faster and more sticky in recent months than many economists had predicted. U.S. consumer prices have risen at the fastest pace in the year since 1990 in the last month, prompting high inflation as a feature of the pandemic recovery and eroded spending power even as wages rose.
Major Wall Street players have said they bought the coin – or became interested in it – thanks to their inflation hedging thesis. Their case has been strengthened by gold, usually thought of as a hedge for inflation, while Bitcoin has progressed in recent months.
However, others say it is not long enough to establish a long history, in fact it can act as a hedge for inflation. Duke University’s Cam Harvey has made that argument in the past, saying theoretically that if investors view gold as similar, Bitcoin could hold its value for a very long time, like in a century or more. In research on gold, it has maintained its value well over the millennia. But he also found that he tends to have mania and crashes in the shorter term.
Matt Maley, Miller Tabak + Co.’s chief market strategist, says many investors see it as inflation hedging, but there is no belief that it will work well.
“I’m not saying it’s not; I think gold has functioned as a hedge for inflation for centuries, so people should use gold in combination with Bitcoin as a hedge,” he said.
The spot price of gold has fallen 1.8% this year, and Bitcoin has gained more than 130% in that span, according to data collected by Bloomberg.
“People are looking for places to put their money,” JJ Kinahan, chief market strategist at TD Ameritrade, said over the phone. But, he added, “it’s hard to say whether it’s hedging inflation or not because we don’t live with inflation in cryptocurrencies. It’s one of those things that everyone thinks, but time will tell. ”
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