It's the Inflation
No, it's not the inflation that's been fueling the price movements of bitcoin.
Anybody trying to hedge a 6% annual inflation rate with an asset that often moves 50% or more in a week is sorely misled.
Then again, the general public has recently become acutely aware that saving money in a bank account that pays little or no interest doesn't make any sense when inflation is as high as it is, so they're certainly looking for alternatives.
But what's a much larger factor is that when money is created by the Fed and then amplified through the fractional reserve system, it needs to find a home. Increasingly, that home is crypto.
For their part, after being embarrassingly wrong in their prediction that inflation would be transitory, Fed policy makers are now doing their best to fight inflation.
The way they do that is to stop printing money as quickly as they can and to start raising interest rates.
So, rather than a slow, gradual easing of quantitative easing that we were previously expecting, they're now talking about cutting all stimulus and hiking rates by March. They're basically slamming the brakes.
Former Federal Reserve Bank of New York President William Dudley was on Bloomberg today, warning that the market is not ready for this level of monetary tightening.
