Bitcoin rose to a new all-time high. What news helped the cryptocurrency?
Consumers in the USA and the rest of the world are facing a new problem – rising inflation. The consumer price index (CPI) in the Americas is up 6.2 percent compared to October of last year. This is a record increase for the last thirty years, which means the situation is more than serious. The problem was caused by the way the previous global threat that confronted global financial markets, the COVID-19 pandemic crisis, was handled. In order to deal with its consequences, the US Federal Reserve began actively printing the dollar, which led to inflation. We explain the situation in more detail.
Note that inflation is not only affected 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 US, which leads to labour shortages.
As a result, companies are forced to attract new people by increasing wages. Well to do this they have to find new sources of income, which in this case is achieved by increasing commodity prices. And this is another factor for the current situation.
Can Bitcoin protect from the crisis?
At this rate of inflation in ten years the purchasing power of 100 thousand dollars will fall to 54 800 dollars, i.e. will almost twice fall. In other words, it is too expensive to keep capital in national currencies now. And in the current situation, alternative assets like Bitcoin may play into the hands of investors.
The rise of CPI
Incidentally, Bitcoin hit a new all-time high, rising 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 – this was hinted at by former US Treasury Secretary Larry Summers, who commented on the situation. Here’s his rejoinder, in which the official shares his take on what’s happening. The quote is quoted by Cointelegraph.
Global financial markets seem to be expecting slow growth and low real interest rates in the next few years, which will deprive central banks of the ability to manage the economy.
This means that the expert suggests that the current environment is the best fit for 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 viewpoint in a separate article.
In the end, it could be that only cryptocurrency holders stand to gain. Remember the bailout checks that the US government first handed out in April 2020? If those who received them had invested in Bitcoin then, they would now have 914 percent more money. For example, an investment of a whole cheque of $1,200 would have generated $12,172 by today.
Growth in the value of the cheque after investing in the cryptocurrency market
And it’s not just Bitcoin that has experienced this growth – the capitalisation of the crypto market has grown from $190 billion to $2.95 trillion in the aforementioned period. Which means the niche has already provided plenty of ways to make money. For example, at the time of the market crash in March 2020, even Efirium was approaching the $100 mark. Moreover, today it is valued 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 tell the difference between a move into a prolonged correction phase and a short-term collapse.
Growth of crypto market capitalization
The rising inflation is expected to continue to have a positive effect on the crypto market as more and more investors will need to find a safe haven for their capital in crypto.
We believe that the current conditions in the global economy are really encouraging cryptocurrencies to become more popular. After all, Bitcoin is up 13.9 per cent in the last month and 329 in the last year. Obviously, this is much more attractive than losing the value of one's money to inflation. So we wait for more crypto investors.
Not to miss out on other industry trends, join our cryptochat. There, we’ll talk about other related topics that affect the world of decentralization in one way or another.
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