Bitcoin, the world’s most dominant cryptocurrency, set a new all-time record at $69,044 a coin after the U.S inflation report showed prices rose to a 30-year high in the month of October 2021.
The US Bureau of Labor Statistics on Wednesday reported that consumer prices increased at the fastest pace in more than three decades at 6.2 percent.
Bitcoin immediately jumped by around $2,500 or 4 percent within 50 minutes of the inflation report to extend its gain in the past week to 8 percent and 346 percent in the past year, giving it about 42 percent of the combined cryptocurrency market’s overall value.
As previously stated on this platform, Bitcoin is now exhibiting the characteristics of traditional safe-haven assets like Gold, meaning investors forced into the unregulated crypto space during the pandemic are now using cryptocurrencies as a legitimate hedge against inflation.
These were Americans heavily paid by the U.S government to ease the effect of lockdown and support struggling families. A lot of Americans with substantial savings are now refusing to go back to work, forcing businesses to shut down due to lack of staff.
The huge government stimulus printing now threatens the strength of the U.S dollar as the increase in money in circulation, escalated by the bonds buying program of the Fed is dragging on the economy and forcing investors to abandon the U.S dollar for unconventional safe-haven assets like Bitcoin.
In a recent note to Investors King, Nigel Green, the CEO of wealth advisory deVere Group, said “These emergency measures, like the massive money-printing agenda, reduce the value of traditional currencies like the dollar.”
Last week, the Fed announced plans to commence tapering this month but no plan to raise interest rates despite the flying inflation rate. The uncertainty surrounding US monetary policy forced many investors to abandon the American dollar for the known Japanese Yen since tapering was announced on Wednesday before Dollar pared losses as reported on Investors King earlier today.
The attractiveness of known safe-haven assets like Yen, Gold, Bitcoin, and others will likely drop now that global investors are expecting the high inflation number to force the federal reserves to announce rate increase in the near term. Suggesting that capital inflow ahead of the projected rate decision will strengthen the greenback in the near term.
