Bitcoin’s status as an inflation hedge has come under scrutiny in the current market, but experts point toward the exceptional market conditions.
Bitcoin has been projected as many things since its inception in 2009. However, the most talked about aspects have been a fungible form of future money and an inflation hedge.
The last Bitcoin (BTC) halving cycle (a block reward halving event that happens approximately every four years) coincided with the raging COVID-19 pandemic, which solidified many people’s belief in the nascent tech as a true hedge against inflation and worldly disorders. One year down the line, however, BTC has lost 75% of its market capitalization and not many would agree with the inflation hedge theory.
During the last year’s bull cycle the likes of Microstrategy, Tesla and numerous other public companies doubled down on Bitcoin’s inflation hedge aspect by adding Bitcoin to their company treasuries. Microstrategy started buying BTC when the price of the top cryptocurrency was trading in the sub-$10,000 price range and continued its purchases until the market reached the top with BTC price near $69,0000.
The decision looked very lucrative in the beginning as the BTC price was touching new highs every month and many in the crypto community hailed Microstrategy CEO as the crusader for Bitcoin’s “inflation hedge” case. However, the sentiment in the community changed quickly with the advent of the bear market, which only got worse with soaring inflation caused by various geo-political issues like the war in Ukraine and subsequent food supply and energy crises.
At present, inflation rates have touched new highs across the world and many countries are struggling to avoid a recession. Bitcoin, like most other assets, is struggling to remain a lucrative investment option, but that doesn’t necessarily mean it has completely failed as an inflation hedge, some say.
Kasper Vandeloock, CEO at quantitative crypto trading firm Musca Capital, believes that BTC is sti
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