As Inflation Hits 30-Year High, Highest Deflationary Cryptos Are Also Setting All-Time Highs
The US inflation rate for consumer goods and services hit a 30-year high in October, jumping 6.2% from the same period last year. This was the fifth consecutive monthly increase of 5% or more, and the fastest annual increase since 1990.
Inflation seems to be everywhere
The Labor Department noted in its announcement that the price hikes were widespread, with the largest increases occurring in energy, shelter, food, used cars and trucks, and new vehicles. . And month-over-month, seasonally adjusted inflation rose 0.9% last month, more than double the 0.4% increase in September. Whether you believe the Fed Chairman and the Treasury Secretary that this inflationary trend is temporary, consumers are feeling it now and no one knows for sure when it will subside.
Bitcoin, Ethereum Rise Then Slump After Inflation Data Release
What is certain is that after the inflation figures were released at 8:30 am ET yesterday, Bitcoin hit $ 68,744 at 9:19 am and Ethereum climbed to $ 4,848.61 at 11:14 am. These levels were new all-time highs for every digital asset. As of this writing, there had been a slight pullback in prices for each with Bitcoin at around 4% of its peak, while Ethereum fell around 2% this morning from yesterday’s peak.
Possible reasons for the surge in prices of these two major cryptocurrencies are Bitcoin’s fixed asset supply of 21 million coins and Ethereum’s recent decision to limit its own supply following an upgrade. major day of programming called London Hard Fork which happened earlier this summer. Both features are deflationary in nature and position the two digital currencies as effective shields against macro-inflationary pressures.
Why Bitcoin Might Be a Better Deflationary Investment Than Gold
For millennia, gold has been viewed as the âgold standardâ which defines itself as a shield against inflation against various asset classes. That remains true today with over $ 10 trillion invested in gold globally – the price of which per ounce is up nearly 1% from yesterday. By comparison, at $ 1.2 trillion in current value, Bitcoin is still considered a “bubble class” asset by 74% of financial experts recently surveyed by Bank of America.
However, Bitcoin might be the best investment alternative to bring down the prevailing inflationary hedge from its golden throne, in light of these differentiating attributes for the main cryptocurrency:
- Physical portability: Billions of BTC can be carried in a secure crypto wallet that fits in a coat pocket, while a billion gold bars are estimated to be around 24 tons.
- Transfer speed: Any amount of BTC can be transferred instantly from person to person, but not with gold. This unique attribute helps reduce transaction costs, eliminate payment delays, and eliminate third-party intermediaries. Obtaining resources faster and more cheaply during inflation cycles is of critical importance to consumers
- Worldwide distribution: Any amount of BTC can be moved digitally anywhere in the world with internet access. Conversely, the maximum amount of gold that can cross the US border is $ 10,000. Larger amounts require a declaration to US Customs and the filing of a FINCEN 105 form.
- Accessibility: All you need to buy BTC is a payment method, a coin exchange, and an internet connection. This allows the “unbanked” masses struggling with inflation or corrupt monetary systems to benefit from economic equality. However, securing any amount of physical gold requires a more complicated process due to its lack of usage, availability, and storage requirements.
- Reserve of value (SOV): BTC has many SOV properties of gold such as scarcity, fungibility, proven appreciation, widespread acceptance, etc. Although Bitcoin cannot be made into jewelry like gold, BTC has other unique characteristics that set it apart from gold. Bitcoin can be divided into subunits much more easily than any type of physical gold. Bitcoin can also be staked, instantly turning it into an interest-bearing asset that can also be guaranteed – a feat that is much more difficult to achieve with gold. Bitcoin is much easier to convert into other assets compared to physical gold.
While no one knows when supply chains will recover or inflation rates may moderate, we now know that there are other protective investments to consider besides gold.