Bloomberg Opinion’s John Authers has done the math: Over the last decade, the headline consumer price index has risen roughly 28%, and denominating that gauge in Bitcoin shows deflation of 99.996%.
The premise has gained momentum as prices on everything from food to gas to housing have advanced faster and been stickier over the past few months than many economists had anticipated.
Meanwhile, MicroStrategy Inc.’s Michael Saylor said the Federal Reserve’s relaxing of its inflation policy helped convince him to invest the enterprise-software maker’s cash into Bitcoin.
Economists with Bloomberg Economics estimate that roughly half of Bitcoin’s recent returns can be explained by inflation fears, with the other half coming from market exuberance and momentum trading.
“We don’t have long enough history to assert Bitcoin is indeed an inflation hedge,” said Wilfred Daye, head of Securitize Capital, the asset-management arm of Securitize Inc.
Theoretically, there is no linkage between Bitcoin’s supply and anything that goes on with the Federal Reserve or any central bank, says Cam Harvey, a professor at Duke University and a partner at Research Affiliates.
He cited the coin’s drop in March 2020, when it lost roughly half its value amid a plunge in U.S.