Bitcoin Rallies off Report of Worsening Inflation

A rising inflation tide lifts bitcoin’s boat

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Bitcoin Jumps On News Of Inflation Spike
Bitcoin’s Relationship With Inflation

Bitcoin Jumps On News Of Inflation Spike

Bitcoin has jumped to new all-time highs, again. This time it is due in large part to a report released this morning by the Bureau of Labor which indicated inflation is increasing faster than expected. The report, measured by the Consumer Price Index “showed that the cost of living in the U.S. rose 6.2% in October from a year earlier, the fastest since 1990.” To make matters worse, core inflation, which doesn’t account for food and energy prices rose 4.6% in October, the highest since 1991.

The report was dismal in every sense of the word. It reported that fuel prices have risen a whopping 12.3% for the month, and energy prices are up 30% year-over-year. Not to be forgotten are poultry, fish, and eggs, which have risen 12% year-over-year. In light of all this, stores-of-value like Bitcoin surged, hitting $68,950, another all-time high.

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The narrative that Bitcoin is a hedge against inflation appears to be resonating with the market, as of course Bitcoin has a fixed supply, and cannot be inflated at the whims of a central authority. Even though we have retraced now from that mega candle, this type of reaction to inflation news is undoubtedly great for Bitcoin and crypto.

The confirmation of this narrative, a cornerstone of Bitcoin’s value prop, was evident in the form of a giant green candle, as seen above. This sets an important market precedent for Bitcoin going forward as fiat monetary policy is doomed to fail, which will lead to inflation becoming rampant and out of control–they can only keep the lid on for so long. If Bitcoin’s price action is inversely proportional to inflation, then Bitcoin truly could go to $1 million dollars without flinching.

$BTC

Ahhh I'm inflation hedginggg pic.twitter.com/f1v36XVVk2

— Will Clemente (@WClementeIII) November 10, 2021

Bitcoin’s Relationship With Inflation

Analysts at JP Morgan actually attributed the rally in October to not only ETF news, but to “rising inflation expectations and bitcoin’s appeal as a hedge against rising prices.” When people ask “where will the money come from” to drive Bitcoin higher. The answer is that people will flee to Bitcoin as a refuge from an already failed fiat system, that is dead and buried but animated by the geopolitical dominance of the United States–which is being tested, but is still present.

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The Department of Labor said in a statement that the inflation was “broad-based”, indicating that it is infecting nearly every critical crevice of the economy. The FED has yet to raise interest rates, and of course, is wary to do so as it will thwart the cheap credit that has allowed businesses to finance operations and expansions, and would trickle down to the consumer. This would cause the economy to “cool down”, which could drastically impact the markets. As Dan Chan, a famous Silicon Valley investor put it, “the interest rate may be so high that many companies will not be able to afford to grow.”

Bitcoin benefits whichever way the FED decides to go, as investors see it as a safe haven from all the funny business that’s conducted in the fiat economy. The purchasing power has been stripped from your fiat, and it’s happening at an alarming rate. This is happening because of inflation of the money supply, and thus inflation of prices. This is the main reason Bitcoin is so valuable, and why fiat will be converted into Bitcoin by the billions to prevent degradation of wealth.

BREAKING: Inflation is up 6.2% year-over-year.

That's the highest increase in 31 years.

Economists & politicians claimed inflation was non-existent, transitory, and even that it was good for you.

Meanwhile, your purchasing power was being reduced at a historic rate — wake up.

— Joe Pompliano (@JoePompliano) November 10, 2021