Inflation coverage? Bitcoin jumps after US consumer price data | Crypto News

Bitcoin extended its earnings after data showed that US consumer prices had risen at the fastest pace in almost four decades.

A report that Bitcoin extended its gains showed that U.S. consumer prices had risen at the fastest rate in nearly four decades.

The largest market value currency cryptocurrency has expanded as an inflation hedge, in part because of its fixed supply. Bitcoin rose 4.4% in New York trading on Friday to $ 50,101. The coin is bouncing around $ 50,000 from a weekend crash that fell 21% on Saturday.

“Bitcoin is still seen as a hedge for inflation, especially for young investors,” said Matt Maley, Miller Tabak + Co’s chief market strategist. “With few restrictions at the moment, it is seen as a safe-haven flight for some investors.”

Proponents of crypto have long argued that Bitcoin and other digital assets, because they are an idiosyncratic asset class, could be placed as hedging against rocking in other areas of the financial market. Only 21 million Bitcoin will be put into circulation according to the computer protocol that regulates its issuance, although this number will not be achieved for several decades.

Many notable Wall Street investors and analysts have come up with the idea of ​​using cryptocurrencies as a hedge against rising prices. Veteran hedge fund manager Paul Tudor Jones has said in the past that he likes it as a wealth repository. Meanwhile, Michael Saylor of MicroStrategy Inc. said the Federal Reserve’s easing of its inflation policy had helped the software-software company’s producer invest money in Bitcoin.

#Inflation as it harms our economy #Infant it damages our anatomy. #Bitcoin

– Michael Saylor⚡️ (@saylor) December 10, 2021

The consumer price index rose 6.8% in the last month from November 2020, according to data from the Department of Labor released on Friday. Those who watched the Bitcoin charts closely saw their profits accelerate after the data was released.

However, there are also many counter-arguments. There may be no correlations that appear, according to Marc Chandler Bannockburn, chief global market strategist at Bannockburn. Following the report, the stock also rose, so the correlation may be with risky assets.

Others believe that Bitcoin does not exist long enough to simplify its image of inflation coverage. In addition, Cam Harvey, a professor at Duke University and a partner in Research Affiliates, behaves like a speculative asset and is prone to periodic crashes.

“If Bitcoin is ‘digital gold’ and gold is a hedge for inflation, then so is Bitcoin, right? Unfortunately, there is no evidence to support that, and the relationship between inflation and gold has also been weak over the years,” wrote Noelle Acheson of Genesis Trading in a report. “In the longer term, however, gold has maintained its value, while currency fiat has fallen; Bitcoin could end up doing the same thing. “