Amid a massive spike of the United States’ Consumer Price Index (CPI), the cryptocurrency community has divided on whether Bitcoin (
$110,171.00 ) (BTC) is really a hedge to inflation.
The CPI, an indicator measuring the average change in prices that consumers pay for a basket of goods and services, saw its largest one-month increase in June over the past 13 years, Business Insider reported Tuesday. The inflation surge reportedly started in March, when CPI rose by 2.6%, followed by subsequent increases in April of 4.2% and eventually 5.4% in June.
But despite the recent growth in CPI-measured inflation, Bitcoin ( $110,171.00 ) has allegedly failed as an inflation hedge as its price has almost halved from $64,000 in mid-April, according to some analysts.
Interesting that as CPI #inflation has climbed from +1.4% y/y in January to 5.4% in June, # Bitcoin ( $110,171.00 ) has essentially been cut in half
[Past performance is no guarantee of future results] pic.twitter.com/QIXeb2m5Vv
— Liz Ann Sonders (@LizAnnSonders) July 13, 2021
“ Bitcoin ( $110,171.00 ) isn’t behaving like an inflation hedge anymore and will continue to remain heavy over expectations over higher yields,” Ed Moya, senior equity analyst at foreign exchange firm Oanda said in a Tuesday note. However, that inflation is viewed as transitory, which could be a reason why the June CPI report wasn’t enough of a catalyst to break Bitcoin ( $110,171.00 ) ’s sideways trading, Moya added.
The crypto community subsequently reacted to these CPI-versus- Bitcoin ( $110,171.00 ) observations, with many industry advocates emphasizing that their early Bitcoin ( $110,171.00 ) investment and gains “have already hedged the future.” Some Bitcoin ( $110,171.00 ) enthusiasts pointed out that Bitcoin ( $110,171.00 ) has been growing historically, posting massive gains over the long term.
InFlaTioN hEdGe # Bitcoin ( $110,171.00 ) pic.twitter.com/OjhUY5OLJV
— Hajek.HODL₿⚡ (@hajek_miloslav) July 13, 2021
Related: Bitcoin ( $110,171.00 ) boon as US inflation hits 13-year high, wages fall to lowest in 21st century
According to some crypto experts, Bitcoin ( $110,171.00 ) is indeed “not a great hedge against inflation.” Mati Greenspan, founder of money management firm Quantum Economics, told Cointelegraph that there “doesn’t seem to be any correlation” between Bitcoin ( $110,171.00 ) ’s price action and inflation or deflation data, stating:
“Certainly Bitcoin ( $110,171.00 ) has been a great performer over time. But most of the gains have occurred during a great global deflationary period in which all risk assets rose. Now that inflation is picking up for real, for the first time since Bitcoin ( $110,171.00 ) ’s inception, it’s drastically underperforming.”
The latest CPI-triggered argument brings another twist in long-running debates regarding Bitcoin ( $110,171.00 ) as a hedge instrument. A number of financial analysts including Nassim Taleb believe that inflation has nothing to do with Bitcoin ( $110,171.00 ) price. Still, some global investors like Paul Tudor Jones have moved into Bitcoin ( $110,171.00 ) to protect their investments from inflation.
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