Re: If inflation is rising, why isn't crypto more valuable now?
The US Dollar's inflation is on the rise as the pandemic coupled with the Russia-Ukraine crisis have damaged the global economy. Any negative effects on the US Dollar will surely affect other countries' economies, since it's the world's reserve currency. Considering that inflation has increased at a fast pace since the start of 2020, scarce assets/commodities like Gold and Bitcoin should've increased tenfold by now. Yet, Bitcoin is struggling to reach a new All-time-high in price while Gold's been unable to get past $1.9k. In the crypto market, Bitcoin is the one cryptocurrency that moves everything with it. So if Bitcoin goes down, so will the rest of the other coins being traded on the market.
My question is why isn't crypto rising in price if inflation on major Fiat currencies have soared like crazy? Am I missing something here? It's a shame since Bitcoin was long hailed to be a safe-haven asset like Gold. Your input will be greatly appreciated. Thank you.
My question is why isn't crypto rising in price if inflation on major Fiat currencies have soared like crazy? Am I missing something here? It's a shame since Bitcoin was long hailed to be a safe-haven asset like Gold. Your input will be greatly appreciated. Thank you.
Crypto is inherently tied to FIAT and what's going on with the economy, it's not in its own bubble. In times of economic distress (inflation, food shortages, war, overblown housing prices et.) people tend to buckle down, and that means not investing in anything. And BTC is not even close to being a safe haven since it's volatility and its low utilisation in the real world is definitely something that will turn away people who want to escape the harsh economic situations. Nor is gold or anything for that matter. What most people are worried about is how they will pay their bills and food, and BTC can't really help with that (that much). So to sum it up, crypto rises when regular people start investing, but when the economic situation worsens, those people tend to stay on the sidelines and what crypto is left with are investors who have money for investing and are not worried about it having to be a solution for a specific economic problem they have. And as we see, those people are not enough.