Inflation hedging?
One of the most controversial actions taken by central banks is all the money they create, a point we discuss quite frequently in these updates.
The concern, of course, is that too much money printing could lead to rampant inflation. As we saw with yesterday's consumer price index figures, higher inflation is already here, and with the Fed continuing to print dollars, it could likely get worse.
The question is: Is bitcoin a valid hedge against inflation?
Apparently, there's somewhat of a hot debate on this within the crypto community. A Cointelegraph article that was released this morning, with quotes from yours truly, gives a fairly good overview of the various opinions.
The most recent data would seem to indicate that the digital currency is not a good inflation hedge, at least not from a trader's perspective.
The CPI inflation numbers have been rising rather steadily during the last few months, while the price of bitcoin has been falling. However, gold prices have been acting similarly. So what does that tell us?
It tell us nothing really. As with most things bitcoin and crypto, we don't really have enough data to answer this question.
To illustrate, here's a graph from The World Bank showing global CPI stats since 1981. As we can see, for bitcoin's entire existence, inflation has been phenomenally low.
