On Friday, the U.S. Bureau of Labor Statistics reported its largest 12-month jump in Consumer Price Index (CPI) numbers since 1982. You might expect Bitcoin — which was designed to be resistant to inflation — to rise on news of the highest inflation metrics in four decades, but after jumping around 4% in the hours after the CPI report, Bitcoin forfeited its gains over the weekend. And since reaching a new all-time high near $69,000 in November, the cryptocurrency has been broadly trending downward even as global inflation has surged. So has Bitcoin’s value as a hedge investment been overstated, or is something else going on? Let’s dig in.
Thats how market works. Price is not calculated by someone. Price does not fallow anything by magic. Price is just the result of a collision of 2 forces - supply and demand. So it will never act on anything exactly how you expect it too.
And one more thing. Inflation hedge (for instance gold) does not grow on high inflation. It grows when there are high inflation expectations (or rather high negative interest rates expectations). Investors always tries to predict future, not presence. So why price did not pump because of this news? Because investors expected this numbers to appear way before first lockdown and were buying years ago. Now its take profit time for them.