Consumers in the US and the rest of the world are faced with a new problem - rising inflation. The consumer price index (CPI) in America rose 6.2 percent compared to October last year. This is a record growth in the indicator over the past thirty years, that is, the situation is more than serious. The problem was caused by the methods of solving the previous global threat facing the global financial markets - the crisis of the COVID-19 pandemic . To cope with its consequences, the US Federal Reserve began to actively print the dollar, which led to inflation. Let's talk about the situation in more detail.
Note that inflation is influenced not only by a significant increase in the volume of currency in circulation, which makes the existing money supply less valuable. According to experts, the situation is also affected by the low unemployment rate in the United States, due to which there is a shortage of labor.As a result, companies are forced to attract new people by increasing salaries. Well, for this you have to look for new sources of income, which in this case are achieved by increasing the prices of goods. And this is another factor for the current situation.
Can Bitcoin Protect Against Crisis
At this rate of inflation, in ten years the purchasing power of $ 100,000 will drop to $ 54,800 , that is, it will almost halve. In other words, it is too expensive to store capital in national currencies now. And in the current situation, alternative assets like Bitcoin can play into the hands of investors.
CPI growth
By the way, Bitcoin reached a new all-time high, having risen in price by 4.7 percent in just a day after the announcement of the new CPI value. The current record as of today is exactly $ 69,000 per BTC on the Binance exchange.
Bitcoin daily chart
Central banks have cornered themselves, hinted at by former US Treasury Secretary Larry Summers, who commented on the situation. Here is his remark, in which the official shares his attitude to what is happening. The quote is from Cointelegraph .
Global financial markets appear to be expecting slow growth and low real interest rates over the next few years, which will deprive central banks of the ability to manage the economy.
This means that the expert assumes that the current conditions are the best suited for the development of the cryptocurrency industry. This is also supported by the confident forecasts of analysts regarding the growth prospects of BTC. For example, Kraken representatives believe that Bitcoin has enough power to grow up to the $ 98,000 mark. Read more about their point of view in a separate article.
As a result, it may happen that only the holders of cryptocurrencies will benefit . Remember the bailout checks that the U.S. government first handed out in April 2020? If those who received them had invested in Bitcoin then, they would now have 914 percent more funds. For example, an investment of a whole check of $ 1,200 would bring in $ 12,172 by now.
Increase in the value of a check after investing in the crypto market
And this growth has been experienced not only by Bitcoin - the capitalization of the crypto market has grown from 190 billion to 2.95 trillion dollars over the aforementioned period. This means that the niche has already provided a sufficient number of ways to make money. For example, during the market crash in March 2020, even Ethereum was approaching the $ 100 mark. And today it is estimated at $ 4,738.
Accordingly, even fans of relatively conservative investments in large projects could make dozens of X's if they found the money and courage to buy assets in a market crash. However, this is usually done by experienced traders, who can distinguish a transition to a long-term correction phase from a short-term collapse.
Cryptocurrency market capitalization growth
It is assumed that the increase in inflation will continue to have a positive effect on the crypto market, because more and more investors will need to find a safe haven for their capital in the crypt.
We believe that the current conditions in the global economy really contribute to the popularization of cryptocurrencies. Yet Bitcoin is up 13.9 percent in the last month and 329 percent in the last year. Obviously, this is much more attractive than losing the value of your money due to inflation. So we are waiting for new crypto investors.
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