After a fast-paced rise from just above $4,000 as the coronavirus pandemic began last March to $63,000 last month, it has cooled down to a balmy $54,600.
Because Bitcoin is capped at 21 million, it is theoretically a hedge against inflation—a safe-harbor asset that shouldn’t lose value over time.
However, as a relatively new asset class, Bitcoin is also a speculative investment, one that can get sold off when there’s concern about the broader markets.
On particularly bad days for global financial markets, everything can fail, even Bitcoin.
When inflation fears in the US spike, rates, the dollar and financials go up, and everything else goes down, even gold.
Much of this month’s increase is fueled by rising prices for used vehicles, as travel restrictions led rental car companies to fire sale their fleets last year, only to buy them back this year.
Gold, a much more mature asset, didn’t get such a boost.