Data reveal that Bitcoin has outperformed expectations as an inflation hedge, despite the fact that the US inflation rate has risen to 6.8 percent per year.
Despite recent concerns, data show that Bitcoin continues to outperform expectations as an inflation hedge.
According to the most recent weekly report from Arcane Research, BTC has raised its holders’ purchasing power by 520 percent since the beginning of 2020, indicating that the cryptocurrency may have outperformed expectations as an inflation hedge.
The US Bureau of Labor Statistics just issued the November CPI numbers, which show that US inflation has surged to a 6.8 percent annualized rate.
If you’re not sure what the Consumer Price Index (CPI) is, here’s an explanation from the Bureau of Labor Statistics:
The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
The Consumer Price Index (CPI) measures the average change in prices paid by urban consumers for a market basket of consumer goods and services over time.
Because Bitcoin’s price hasn’t risen since the higher-than-expected CPI percentage was announced, some have argued that the coin isn’t an inflation hedge.
However, Arcane Research points out that it is a lagging index because CPI reflects inflation that has already occurred. As a result, if BTC is truly an inflation hedge, the inflation should have already been factored into its price by now.
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Now, here’s a chart that compares BTC’s performance to that of various inflation hedges since January 2020:
Due to all of the stimulus checks and supply chain concerns, the time since the beginning of 2020 has been one of significant inflation. As shown in the graph above, BTC returned 520 percent during this time period, well-outperforming gold’s return of 8% and the 500’s gain of 33%.
According to the paper, BTC’s exceptional growth in such a short period can only suggest that the cryptocurrency is a terrific inflation hedge.
Bitcoin’s price is currently hovering around $49k, down 1% in the last seven days. The cryptocurrency has lost 21% of its value in the last thirty days.
The chart below depicts the price trend of BTC over the previous five days.
Bitcoin has generally gone sideways since the meltdown, with little signs of rebound so far. At the moment, it’s unknown when the coin’s price will break free from this rangebound environment or which direction it will break out in.