Opinions differ regarding the position of Bitcoin in the face of inflation that worries many countries, including powerful economies such as the United States and the European Union. Some see Bitcoin as a good hedge once morest inflation since it is protected from price hikes, however other experts and analysts assert that Bitcoin – mainly – is risky following losing its value in the wake of falling stocks.
and in Article Published by CoinTribune, writer Emile Stantina said that there are several reasons why we consider bitcoin as a hedge once morest inflation, as the total currency offerings in circulation are limited to 21 million units, unlike regular money whose quantity increases indefinitely. . In fact, central banks can print money for government assistance programs or any other purpose, so prices for basic necessities can rise as well.
Bitcoin linked to gold
“Bank of America” - in a newly published report – questioned the status of Bitcoin as a way to hedge once morest inflation, given its link to the stock market. Two analysts from this bank described Bitcoin as a risky asset. According to them, the movement of cryptocurrencies tends to follow the movement of stock markets, and analysts Alkesh Shah and Andrew Moss highlight how important the relationship between the S&P 500 and Nasdaq 100 indices is and Bitcoin.
The value of Bitcoin fell below $30,000 along with a significant drop in stocks following the US Federal Reserve announced a 0.5% interest rate hike. Bitcoin is fighting high inflation due to government stimulus measures in the wake of the COVID-19 pandemic.
The crisis in Ukraine
Cryptocurrency expert Ben Macmillan explained that the Russian-Ukrainian conflict has affected cryptocurrency prices mainly this year, and this relates to all risky assets. Previously, traders were able to take advantage of the relatively attractive price of the cryptocurrency from a long-term perspective, but now a significant drop is likely in the short term.
The writer concluded that although some see Bitcoin as a store of value, its correlation with gold has been zero since June 2021, and in the past two months this value has become negative. However, Bitcoin is still at the beginning of the maturity curve to move into the digital gold category, and until that time it still needs more care.
