The case for Bitcoin as an effective inflation hedge has been made for a long time, and so far, the digital asset has not disappointed those who have invested in it. Bitcoin’s gains over the last several years have been significantly more than the rate of inflation, which is now at over 6% and is expected to rise even further in the coming months. This has cemented the asset’s status as the best inflation hedge.
However, Bitcoin has found a new rival for this distinction. Ethereum is the second-largest cryptocurrency by market capitalization and has outpaced bitcoin year over year. The digital asset does not yet command the same level of respect as bitcoin, but a recent study suggests that this will change shortly. According to the research, Bitcoin may be supplanted as the best inflation hedge by Ethereum.
According to a new study conducted by scholars from the University of Sydney and Macquarie University, Ethereum has the potential to overtake Bitcoin as the leading inflation hedge. The researchers said that as cryptocurrencies grow more prominent, investors increasingly see them as a superior hedge than gold, particularly bitcoin.
The rate of inflation has recently alarmed investors as the Fed has gone on a printing spree. There have been requests to halt the printing rate, but it has remained unabated, leading inflation rates to skyrocket. This is not just a problem for the United States. Other nations throughout the world are experiencing comparable or even greater rates of inflation. This has fueled cryptocurrency growth as people and organizations seek to capitalize on their high return rate.
According to the Australian experts, Ethereum’s recent developments indicate that it may eventually outperform Bitcoin. The blockchain, according to the research, demonstrates that cryptocurrencies may become deflationary, pointing to the upgrade to ETH 2.0, which is slated to take place sometime in 2022.
It is no secret that rising inflation rates have played a significant role in driving crypto adoption over the last year. Experts have warned of the effects of high rates, such as a rise in food costs and common things, which is already happening.
Gold has gone out of favor as a tool for the common individual to protect themselves against inflation. For the longest time, the shining rock was the favorite way of inflation hedging among investors, but given the asset’s constant negative returns in recent years, it no longer fulfills the function for which it was so widely wanted.
