Inflation is gradually rising around the world, and some believe this is the result of the Federal Reserve’s weak monetary policy and a significant increase in the money supply during the outbreak of the Corona epidemic. To overcome inflation, many experts and investors have recommended investing in real assets such as precious metals (such as gold, silver, etc.), including digital assets such as bitcoin, which are better assets to protect. Inflation is considered.
Inflation is rising
In January 2021, the US inflation rate was around 1.4 was, but is now around 5.4 ag. According to Charlie Bello, the founder of Compound Capital Consultants, since October 21, inflation expectations in the country have been at their highest level since 2006.
Not just the United States. Trading Economics data show that other G20 countries are also seeing sharp increases in inflation, including Argentina, Canada, Germany, Spain and many more. If this trend continues for a long time, it will be a frightening development.
It may be too early to predict inflation, but many people do not seem to take advantage of it. Twitter CEO Jack Dorsey believes that inflation will change a lot of things. It is not yet clear how much this can affect people’s livelihoods, but it is speculated that real estate owners will benefit in such a situation or at least keep their money from depreciating.
Bitcoin is hope
Amid uncertainty, many people bet on cryptocurrency assets to protect against inflation. Peter Teal, the founder of PayPal, is one of those people who hopes for bitcoin, as much as he wished to buy more bitcoin. “I feel there is less investment in it,” Teal said during an event hosted by the Lincoln nonprofit network.
[Bitcoin is] The canary in the coal mine is the most honest market we have in the country and it tells us that this regime is worn out … it will explode soon.
Fear of the dollar depreciating through inflation has drawn more investors and institutions to Bitcoin. For example, MicroStrategy, Bitcoin’s largest investor, began investing in cryptocurrencies to prevent inflation, among other reasons. Since its first acquisition in August last year, the company has not stopped buying bitcoins. At present, it is reported to have BTC 114,042, valued at approximately $ 7 billion, per Coingecko.
There may be more entries in bitcoin and cryptocurrency markets in the future as people seek inflation protection assets. Recently, JPMorgan strategists have said they are more convinced that the recent rise in bitcoin to a record high of $ 67,000 was due to fears of inflation rather than optimism about bitcoin ETFs.
We believe that the perception of Bitcoin as a better protector of inflation than gold is the main reason for the current growth, which has changed from gold ETFs to bitcoin funds since September.
JP Morgan strategists