Why has Bitcoin not worked as a hedge against inflation?

Why has Bitcoin not worked as a hedge against inflation?

Despite the fact that its enthusiasts have promoted Bitcoin as a refuge asset, the situation of the markets in recent months shows otherwise.

So far this year, most countries in the world have faced a strong increase in inflation levels, some reaching historic figures, such as the case of the United States, which even exceeded 9% in June, and with these rates, The cryptocurrency industry has not gone unnoticed.

Almost in parallel, together with the increase in inflation, there has been a general fall in the cryptocurrency market, mainly Bitcoin, which has lost a good part of its market capitalization when compared to the numbers at the end of 2021.

In this sense, an article recently published by the American media CNBC analyzes the role that this type of digital asset has had in the economy of its users, above all, because the majority of enthusiasts have been in charge, for years, of promoting the use of cryptocurrencies as a means of refuge against phenomena such as inflation.

However, and observing the current state of the traditional markets and crypto assets, it can be concluded that Bitcoin has not been able to be a protection asset against the inflationary index, at least for now.

The CNBC article also points out that this weakness against the traditional market that Bitcoin has could be noticed even before the blow of inflation, this because it has had different periods of downward trend, in addition to being characterized by its own volatility.

For this reason, analysts consulted by the American media consider that, for the moment, these crypto assets cannot function as refuge assets, such as gold, mainly because their market value depends almost exclusively on user speculation, which does not allows it to have a stable value.

Samuel Edwards
Samuel Edwards is the name you must have heard many times while reading reports related to Finance, that's what he is good at. From Major Investments to Stock Market Updates, he got 'em all. Be ready to blow your mind by the mind-blowing reports of Finance World from Samuel Edwards.