Why hasn’t Bitcoin worked as a hedge against inflation?

Despite its enthusiasts promoting Bitcoin as a safe-haven asset, the state of the markets in recent months suggests otherwise.

So far this year, most countries around the world have experienced a sharp rise in inflation, with some reaching historic figures, such as the case of the United States, which exceeded 9 percent in June, and at these rates, the cryptocurrency industry has not gone unnoticed.

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Almost in parallel, along with the increase in inflation, there is a general fall in the cryptocurrency market, mainly Bitcoin, which compared to the figures for 2021. at the end, lost a large market capitalization.

In this sense, a recent article published by the American media CNBC analyzes the role of this type of digital asset in the consumer economy, primarily because most enthusiasts have been responsible for many years for using cryptocurrencies as a refuge from phenomena such as inflation.

Bitcoin is one of the cryptocurrencies currently held by most investors that have suffered losses due to the crash. EDH photo/file

However, observing the current state of traditional markets and cryptocurrency assets, it can be concluded that Bitcoin could not be a hedge against the inflation indexat least for now.

The CNBC article also points out that this weakness against the traditional Bitcoin market was seen even before the inflation hit. because it had different periods of decline and was also characterized by volatility.

Also: Spending on Bitcoin reduced funds for other priorities and stalled the agreement with the IMF

For this reason, analysts consulted by American media believe that these crypto-assets cannot currently act as a safe haven like gold, mainly because their market value depends almost entirely on user speculation, which prevents it from having a stable value. .

The South Korean authorities have reportedly ordered the freezing of 67 million USD Bitcoin associated with Do Kwon

Source: www.elsalvador.com

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