US Inflation at the Highest Point – Bitcoin Tanks as a Result

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Since it was invented, Bitcoin has always been touted as inflation-proof. The leading cryptocurrency in the world has seen its fair share of ups and downs. The price has reached new heights last year and for a big part of this one too, before it fell into a slump that’s still going strong.

In the past week, Bitcoin’s price has been dropping. That comes at a time when US inflation has just hit the highest point in the past 13 years. The Fed’s easy money policies have been a driving force behind the inflation, which shouldn’t have affected Bitcoin at all. However, what we’re witnessing today are price drops that go hand in hand with the unexpected inflation surge.

There’s a silver lining to it – many investors believe now’s the perfect time to buy BTC.

Year-Over-Year Inflation Rises Over the Projected Target

The current year-over-year inflation in the USA has risen over the projected target of 2%. This is the percentage the US Federal Reserve sees as economically healthy. This is a very concerning development that threatens the economy. The Fed is trying to calm people down, saying that this is only a temporary surge caused by the global coronavirus pandemic. However, it’s a sign of major concern, and for Bitcoin holders as well.

The leading cryptocurrency in the world by market volume has seen a significant price drop over the past couple of weeks. Bitcoin should have been a hedge against inflation in any currency due to its limited supply and its decentralized nature. Bitcoin has been gaining strong support from countries such as El Salvador, yet the inflation spike has made many investors rethink their steps.

Of course, long-time investors and crypto experts are completely unfazed by the recent developments. They are seeing this as an opportunity to buy Bitcoin and hold onto it in the long term. There’s still a widespread belief that Bitcoin’s recent negative run will end with a bullish charge that will allow it to reach new heights. We’re all waiting on it, yet there’s no sign of the surge yet.

Are Hyperinflation Fears Unfounded?

For those who don’t know, inflation is concentrated in a subset of goods that are associated with global pandemic disruption. The surge in demand after reopening the USA is incredible. Take used cars for example – the demand is up 42.5% compared to the same time last year, which makes up about a third of the current inflation.

However, that’s only a temporary surge. This category and many others are already falling back down to Earth. Wholesale auto prices have taken a dip last month, and retail prices will soon follow. In that way, a big chunk of the inflation will be out of the system. While inflation won’t disappear overnight, things will likely calm down soon.

We hope that it regulates Bitcoin’s price too. It ties into the belief that there’s a bullish run incoming, and we wouldn’t mind seeing it too.