Bitcoin’s All-Time High: Not Hedged for Inflation?

If bitcoin is meant as a protection against inflation, shouldn't it be adjusted for inflation?

Inflation-adjusted, Bitcoin has not surpassed its highest value.

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Bitcoin’s recent all-time high of $69,325 has sparked discussions about whether it truly serves as a successful store of value. While the price rally has been impressive, when considering inflation, bitcoin is technically worth less than its previous high in November 2021.

According to the U.S. inflation calculator, in order for a single bitcoin today, valued at around $67,000, to have the same purchasing power as bitcoin in 2021, it would need to reach $78,905.45. This discrepancy could be seen as more of a reflection of the weakening U.S. dollar rather than a flaw in bitcoin itself, especially considering its year-over-year rally of over 230%.

In other words, the recent market peak of bitcoin would have had the same purchasing power as $60,907 in 2021, $55,097.30 in 2017, and $52,363.34 in 2013 – all years that witnessed significant price appreciation for the cryptocurrency.

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🔎 But wait! Isn’t it ironic that a volatile asset like bitcoin hasn’t kept up with inflation? Well, let’s put things into perspective. If we rewind to the year 2008 when bitcoin was first launched, it didn’t even have a market value. Owning a bitcoin today would have been equivalent to having $48,395.13 in 2008. Bitcoin reached parity with the U.S. dollar in February 2011 and has been steadily gaining value ever since.

The current rally, fueled by the successful launch of spot market bitcoin exchange-traded funds (ETFs) and other contributing factors, has solidified the notion that crypto is here to stay, whether or not it continues to climb. The number of people proclaiming bitcoin’s demise is diminishing, while its roster of supporters continues to grow.

🌍 Moreover, bitcoin has reached fresh all-time highs in various countries outside of the U.S., including the European Union, Japan, and Turkey. This is partly due to the depreciation of local currencies relative to the U.S. dollar. The U.S. dollar index (DXY) has gained 10.7% since November 2021, causing many currencies around the world to lose value.

One of bitcoin’s major selling points is its potential to hold value better than fiat currencies. Despite the Federal Reserve’s attempts to navigate the economic fallout from the pandemic, many have lost faith in the ability of technocrats to manage the nation’s finances. The U.S. government has printed $13 trillion during COVID alone, resulting in increased prices for consumer goods.

Interestingly, bitcoin’s rise is parallel to that of physical gold. Central banks worldwide, including Turkey, China, India, and Kazakhstan, have been increasing their official gold reserves, creating increased buying pressure. This convergence suggests that both bitcoin and gold are being seen as hedges against traditional currencies.

It’s difficult to predict bitcoin’s long-term performance, but holders find reassurance in the fact that the network is capped at 21 million coins, theoretically creating a more predictable and potentially deflationary “monetary policy.” This is particularly relevant given bitcoin’s resilience during a period of heightened interest rates, which many analysts believed would dampen crypto prices.

🔍 Potential questions readers may have:

1. How does bitcoin compare to traditional stores of value like gold? Bitcoin’s recent rally alongside the surge in gold prices suggests that both assets are being sought after as hedges against traditional currencies. While gold has a long-standing reputation as a store of value, bitcoin offers unique benefits such as portability and ease of transaction.

2. Will bitcoin’s value continue to rise? The future value of bitcoin is uncertain, but considering its recent surge and growing confidence in its long-term potential, it’s not out of the question for it to climb another $10,000 and surpass its inflation-adjusted price. However, it’s important to remember that the true value of bitcoin lies in its utility, not just its price in dollars.

➡️ Recommended Articles: – Bitcoin Soars to a Record – but What’s the Price? – Bitcoin’s Test of All-Time Highs Means Old Miners Are Selling

💡 Looking ahead, bitcoin’s prospects remain intriguing. As the global economy continues to evolve, cryptocurrencies are becoming increasingly integrated into various industries. Institutional adoption and regulatory clarity are key factors that could further propel bitcoin’s value. Furthermore, advancements in blockchain technology and the ongoing development of decentralized finance (DeFi) suggest a promising future for digital assets.

📚 Reference List: 1. Bitcoin Price | BTC Price Index and Live Chart – Blocking.net 2. Inflation Calculator 3. Bitcoin’s Test of All-Time Highs Means Old Miners Are Selling 4. Bitcoin Soars to a Record – but What’s the Price? 5. Ripple Chairman Chris Larsen Hacked – Reported 213M XRP Worth Approximately $1,125M 6. Crypto Whales Accumulating AI Crypto Coin 2024 Rally 7. Injective (INJ) Eyes New All-Time High as Bitcoin Surges Past $46K 8. Ripple Chairman Chris Larsen Hacked – Reported 213M XRP Worth Approximately $1,125M

💬 We want to hear from you! Share your thoughts on bitcoin’s value and its potential as a store of value. Are there any other digital assets you believe hold promise in the future? Comment below and don’t forget to share this article on your favorite social media platforms! Let’s keep the conversation going. 👇

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