New data shows that the U.S. Consumer Price Index hit 6.8% in November, marking the fastest rate of inflation since 1982 — but it didn't help Bitcoin break $50,000.
Staggering inflation figures were released in the U.S. last Friday — but Bitcoin didn't react in the way many hoped.
New data shows that the Consumer Price Index hit 6.8% in November, marking the fastest rate of inflation since 1982.
Although the grim figures did give BTC a sudden jolt of $1,000, the world's biggest cryptocurrency rejected at $50,000 — and gave up all of these gains a short time later.
With inflation now consistently above the 2% level set by central banks including the Federal Reserve and the Bank of England, economists are now racing to bring it back down to controllable levels.
And this brings us to why Bitcoin might be struggling right now. Within days, we're about to find out whether the Fed plans to end the stimulus sooner than expected — turning off the money taps and setting the stage for interest rate hikes. Both events have been instrumental in helping BTC and the stock market perform so strongly.
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Questions Remain
Some analysts argue that it is far too early to describe Bitcoin as an inflation hedge — and that, for now, gold is more effective at holding its value than the world's biggest cryptocurrency.
With a market cap of about $913 billion at the time of writing, BTC lags far behind the likes of gold, which has a collective valuation of $11.3 trillion.
Bitcoin enthusiasts have confidently predicted that the cryptocurrency will one day match gold's market cap — resulting in a price of $500,000 per coin — and state that "we're still early" when it comes to adoption. ARK Invest CEO Cathie Wood believes this milestone can be reached in the next five years if institutions gain exposure to BTC.
They also argue that gold has a number of benefits over Bitcoin — not least because it is divisible, provably scarce and easy to store and transport.
