Bitcoin hits a record $69,000 as inflation hedge drumbeat grows louder

The largest digital asset by market cap rose 1.9% to $68,991 on Wednesday, topping a previous high set in New York trading late Monday. Other coins rose as well, with the Bloomberg Galaxy Crypto Index – which tracks the major cryptos – reaching its highest level since May, up 2.4%.

The coin’s rise can be explained, at least in part, through the fundamental argument – which has gained traction in recent months – that bitcoin can act as an inflation hedge. Crypto backers argue that, unlike the dollar or any other traditional currency, the digital coin is designed to have a limited supply, so it cannot be devalued by a government or central bank distributing too much.

Cryptocurrency Benchmark Administrator, CF Benchmark CEO Sui Chung said, “Bitcoin began in August and continues to enjoy a bullish rally that accelerated through September and October. The latest phase of its rally began in anticipation of bitcoin’s launch in October. Happened.-Futures ETF, but “seems to be driven now by the continued inflation that we are seeing in all of the world’s major economies.”

Prices for everything from food to gas to housing have risen sharply over the past few months and are more sticky than many economists expected. US consumer prices rose last month at the fastest annual pace since 1990, decrying high inflation as a hallmark of recovery from the pandemic and a rise in wages as well as spending power eroded.

Major Wall Street players have said they have bought the coin — or are interested in it — thanks to the inflation-hedge thesis. His case is bolstered by the fact that gold, commonly regarded as an inflation hedge, has underperformed in recent months while bitcoin has advanced.

Still, others argue that it doesn’t have a long enough history to establish that it may in fact act as an inflation hedge. Duke University’s Cam Harvey has argued in the past that, theoretically, if investors treat it like gold, bitcoin could hold its value for a very long time – as in a century or more. In his research on gold, he found that its value has been kept for well over millennia. But he also found that it is prone to mania and crashes in the short term.

Matt Malee, chief market strategist at Miller Tabak + Co., says a lot of investors are viewing it as an inflation hedge, but he doesn’t believe it will work out well.

“I’m not saying it won’t – I think gold has served as an inflation hedge for centuries, so people should be using gold in conjunction with bitcoin as a hedge,” he said. said.

According to data compiled by Bloomberg, the spot price of gold is down 1.8% this year, while bitcoin has gained more than 130% over that period.

“People are looking for places to put their money,” JJ Kinahan, chief market strategist at TD Ameritrade, said over the phone. Inflation has passed with cryptocurrencies. It’s one of those things where everyone thinks it will happen, but time will tell.”

This story has been published without modification in text from a wire agency feed. Only the title has been changed.