{"id":369527,"date":"2021-11-19T18:47:00","date_gmt":"2021-11-19T15:47:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/inflationary-winds-from-around-the-world-spell-a-sea-change-for-bitcoin\/"},"modified":"2021-11-19T18:47:00","modified_gmt":"2021-11-19T15:47:00","slug":"inflationary-winds-from-around-the-world-spell-a-sea-change-for-bitcoin","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/inflationary-winds-from-around-the-world-spell-a-sea-change-for-bitcoin\/","title":{"rendered":"# Inflationary winds from around the world spell a sea change for Bitcoin"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3df5d86e6f0\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3df5d86e6f0\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/inflationary-winds-from-around-the-world-spell-a-sea-change-for-bitcoin\/#A_global_phenomenon\" >A global phenomenon?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/inflationary-winds-from-around-the-world-spell-a-sea-change-for-bitcoin\/#Greater_impact_in_the_developing_world\" >Greater impact in the developing world?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/inflationary-winds-from-around-the-world-spell-a-sea-change-for-bitcoin\/#Entering_unmapped_waters\" >Entering unmapped waters?<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Inflationary winds from around the world spell a sea change for Bitcoin <\/strong>&#8221;<\/p>\n<div class=\"post-content\" data-v-128018ef>Is the global economy in uncharted territory now vis-a-vis Bitcoin (BTC) and inflation? During most of the cryptocurrency\u2019s brief life, the economic environment has been <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ly pro-growth with stable prices but recently, there are fresh warnings of an inflationary storm.\u00a0<\/p>\n<p>If so, what does it mean for Bitcoin, long promoted by partisans as an inflation hedge though not really tested in this way since its 2009 founding? That is, will millions of individuals and institutions flock to BTC as a safe haven \u2014 an alternative to gold or the United States dollar?<\/p>\n<p>Recent reports, like the 6.2% October rise in the consumer price index (CPI) of the United States \u2014 a 30-year record \u2014 were sobering, though this recent bulge in a single national economy might be more related to ongoing supply-chain snarls and pent-up post-pandemic consumer demand than any secular change in global markets.<\/p>\n<p>\u201cYes, it [i.e., inflation] is potentially a problem,\u201d Mauro Guill\u00e9n, dean at the University of Cambridge&#8217;s Judge Business School, told Cointelegraph. But, much of inflation\u2019s danger is tied to consumers\u2019 expectations of the future. If they believe that continued rising prices are an enduring fact of life, then they will purchase items sooner rather than later, anticipating higher prices.<\/p>\n<p>\u201cThe fact that U.S. consumers are postponing buying big-ticket items due to inflation suggests that they believe inflation will come down,\u201d said Guill\u00e9n, adding: \u201cI am guardedly optimistic that this is temporary.\u201d<\/p>\n<p>Others aren\u2019t so upbeat. \u201cIt is clear now that inflation is less transitory than was initially hoped,\u201d Itay Goldstein, a professor of finance at the Wharton School, told Cointelegraph. The world is struggling with supply-demand imbalances following the pandemic, and COVID-19-related monetary and fiscal stimulus also factor into recent inflation reports, but \u201cit seems that inflation has taken a deeper hold and will take longer to subside,\u201d according to him. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"A_global_phenomenon\"><\/span>A global phenomenon?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>\u201cInflation has accelerated, and not just in the U.S.,\u201d Marc Chandler, managing director at Bannockburn Global Forex, told Cointelegraph. Last week \u201cwe also learned that China\u2019s CPI jumped from 0.7% year-over-year to 1.5%.\u201d Will it last? It\u2019s not clear at this point. \u201cWhat we do know is that price pressures have not peaked and may not peak until well into next year.\u201d<\/p>\n<p>But, if global inflation were to worsen dramatically? Then \u201cI would expect [crypto] adoption by both buyers and sellers to really explode,\u201d Leonard Kostovetsky, assistant professor at Boston College&#8217;s Carroll School of Management, told Cointelegraph while adding that this isn\u2019t the likeliest outcome: <\/p>\n<blockquote><p>\u201cI don\u2019t see this h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ening any time in the foreseeable future. My guess is that inflation will get under control fairly soon \u2014 next four years, perhaps \u2014 as pressure grows on policymakers to rein it in.\u201d<\/p><\/blockquote>\n<p>Bitcoin received a price boost recently from the debut of the first-ever U.S. Bitcoin futures ETF, but it \u201cseems to now be fueled by the sustained inflation that we are witnessing across all the world\u2019s major economies,\u201d Sui Chung, CEO of CF Benchmarks, a cryptocurrency benchmarks administrator, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2021-11-10\/bitcoin-hits-record-as-inflation-hedge-drumbeat-grows-louder\">told<\/a> Bloomberg.<\/p>\n<p>Bitcoin, of course, has a fixed supply cap of 21 million BTC. The USD, by comparison, is elastic and the growth in the United States M1 Money Stock has ballooned more than five-fold over the past five years: From $1.378 trillion in September 2016 to $7.245 trillion in September 2021 (426%), <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/fred.stlouisfed.org\/series\/M1REAL\">according<\/a> to Federal Reserve Bank of St. Louis data.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-11\/562e9d79-2a03-4685-9036-d97fc023e5ed.png\"><\/figure>\n<p>\u201cIt is true that part of the attraction of cryptocurrencies like Bitcoin originates from the fear of inflation in fiat currencies,\u201d said Goldstein. \u201cI suspect that inflationary pressure will thus help Bitcoin and other cryptocurrency\u2019s prices.\u201d<\/p>\n<p>But, BTC\u2019s fixed cap may not make such a difference, others contend. \u201cThe price of Bitcoin is driven by demand,\u201d said Guill\u00e9n. If people believe that it\u2019s a good store of value, then they will purchase BTC \u2014 which seems to be the case now, he allowed. \u201cBut, I wonder what will happen when interest rates go up and people realize that a Treasury bill will pay a nice interest, and it is so safe.\u201d<\/p>\n<p>\u201cI think that old saw about limited supply needs to be unpacked,\u201d said Chandler. \u201cOne can talk about the money link now after the 40% rally in October, but what happened to the money rule in Q2 when BTC fell from $58,900 to $34,500.\u201d<\/p>\n<p>Bitcoin\u2019s limited supply may not even give it an edge over other cryptocurrencies. Kostovetsky doubted that Bitcoin\u2019s capped circulation gave it any big advantage over Ether (ETH) as a safe haven, for instance. \u201cThe key advantage of crypto as an inflation hedge would be that there are supply rules that can not be manipulated by humans.\u201d Savers wouldn\u2019t have to worry about some \u201cartificial [i.e., politically motivated] increase in supply that would make their savings worth less,\u201d he said. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"Greater_impact_in_the_developing_world\"><\/span>Greater impact in the developing world?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Much of the recent inflation discussion focused on the U.S., but China, too, appears to be feeling some effects. That nation\u2019s producer price index <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.reuters.com\/world\/china\/chinas-factory-gate-inflation-hits-26-year-high-2021-11-10\/\">soared<\/a> 13.5% in October (year-on-year), after a 10.7% increase in September. This raises other questions: Will global inflation hit the developing world harder than the developed world, and if so will poorer countries be more likely to adopt Bitcoin as an inflation hedge?<\/p>\n<p>\u201cI do see lower-income people and countries suffering from the impact of inflation,\u201d said Chandler, especially those with weak banking systems and numbers of unbanked households. Before they can take advantage of Bitcoin or other cryptocurrencies, however, they arguably need to possess, at a minimum, cell phones and a certain level of financial literacy. <\/p>\n<p>\u201cBitcoin is proving to be a viable alternative to other more classic inflation hedges like gold,\u201d Dan Gunsberg, CEO at HXRO Network, told Cointelegraph, adding that \u201cpoorer countries will continue to adopt Bitcoin as a hedge against inflation.\u201d That said, while investors may flock to Bitcoin as a safe haven, it is still widely viewed as a risk asset and tends to correlate with other speculative assets like equities, he added. Guill\u00e9n was less alarmed on the inflation front: <\/p>\n<p>\u201cSo far, emerging markets and developing countries are not experiencing inflation rates higher than the United States. The dollar will remain strong. I don\u2019t think we will see high global inflation.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Entering_unmapped_waters\"><\/span>Entering unmapped waters?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>All in all, \u201cWe are in uncharted territory,\u201d said Kostovetsky. No one really knows if inflation will be severe and widespread or mild and localized, while Gunsberg added that \u201cWe have been in uncharted territory for inflation for longer than what&#8217;s been publicly communicated, which has been reflected in the price of Bitcoin,\u201d as well as other financial assets over the past 12-18 months. <\/p>\n<p><strong><em>Related: \u200b\u200b<\/em><\/strong><strong><em>Are institutional investors the key silent partners of crypto?<\/em><\/strong><\/p>\n<p>Still, if inflation does turn sharply higher, while cryptocurrencies manage to become less volatile \u2014 two big ifs, admittedly \u2014 then \u201cthere is potential for people to hold their savings in crypto,\u201d Kostovetsky told Cointelegraph, which would mark a big sea change indeed. <\/p>\n<p><template data-name=\"subscription_form\" data-type=\"law_decoded\"><\/template><\/p>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/inflationary-winds-from-around-the-world-spell-a-sea-change-for-bitcoin\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Inflationary winds from around the world spell a sea change for Bitcoin &#8221; Is the global economy in uncharted territory now vis-a-vis Bitcoin (BTC) and inflation? During most of the cryptocurrency\u2019s brief life, the economic environment has been generally pro-growth with stable prices but recently, there are fresh warnings of an inflationary storm.\u00a0 If&#8230;<\/p>\n","protected":false},"author":1,"featured_media":369528,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMTEvZDQ3OWEwYzgtMzQ1ZC00MjY4LWJiNzUtMDRjMWYzMTJkYzA5LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,70551,70934,67874],"class_list":["post-369527","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-inflation","tag-regulation","tag-united-states"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/369527","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=369527"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/369527\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/369528"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=369527"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=369527"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=369527"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}