What will happen to Bitcoin in the future?

During the crisis, consumer prices in Europe rose 5.8 per cent year-on-year in February, up from 5.1 per cent the previous month, beating economists’ average forecast of 5.6 per cent. Notably, the energy sector recorded the largest price fluctuation at 31 per cent, much higher than consumer goods.

Inflation rates in different areas

According to Cointelegraph sources, the US Consumer Price Index (CPI) rose 7.5 per cent year-on-year in January 2022, the highest in nearly four decades. Bitcoin analyst Jack hinted in this regard that inflation risks associated with the Russia-Ukraine crisis could leave the Fed with two options.

First, the Fed could aggressively raise interest rates to lower inflation, thereby increasing recession risks. Or its representatives will have to continue the programme of reducing stimulus only to burden the economy with rising consumer prices and a reduction in the purchasing power of the US dollar. Here is the expert’s rejoinder, in which he shares his view of the situation.

If easing continues, inflation will continue to rise, Bitcoin and gold seem to be good bets for now as long as a recession remains inevitable. But if all or almost all assets collapse, you buy “phoenixes that rise from the ashes”.

In other words, the expert generally considers Bitcoin and other cryptocurrencies to be a suitable investment vehicle in the world's most unpredictable circumstances. Still, BTC has repeatedly recovered from its collapses before setting new price records. Just look at the fall of Bitcoin to the level of 4-5 thousand dollars in March 2020 on the background of the spread of coronavirus. Since then, the main coin has managed to set a record at $69,000 - and that's a serious rate of return.

Fed chief Jerome Powell

The analyst analogy came hours before US Federal Reserve Chairman Jerome Powell confirmed that he would propose a 25 basis point interest rate hike at the next Federal Open Market Committee (FOMC) meeting in mid-March. Powell noted that the Fed had assessed the prospect of successive rate hikes by the end of 2022. But “Russia’s recent invasion of Ukraine has prompted them to proceed cautiously”. Here’s the quote.

We are going to avoid adding uncertainty to what is already an extremely complex and uncertain moment in geopolitics.

However, Powell did not rule out the possibility of raising interest rates by half a percentage point if the next inflation figures are higher than expected.

If inflation is higher or more persistently high than it is now, then we will be ready to act more aggressively.

Representatives of the cryptocurrency community are confident that a softer interest rate hike will give investors a leg up on digital assets. As a reminder, during dramatic changes in the economy, capital owners prefer to move capital out of riskier assets, which includes crypto.

Bitcoin continued to fall after Powell’s speech, briefly dropping more than 2 percent to below $43,000 on March 3. The fall didn’t end there: today, BTC is trading at $40.9 thousand. And the four-hour chart of BTC looks like this.

Four-hour chart of the BTC rate

The downward move contrasted with a jump in the US Dollar Index (DXY), which rose 0.25 percent over the same period. This suggests that it is the dollar that global investors are favouring more in this time frame amid the crisis.


We believe Bitcoin can traditionally play the role of a safe haven for investment value. Still, the cryptocurrency has been in crisis many times before, amid pandemics and other unpredictable events, but has eventually returned to and surpassed its former highs. Whatever the case, digital asset holders are now hoping for relatively lenient action by US authorities to create an environment for others to connect with crypto.