Bitcoin’s Inflation Narrative Boosts as USD Losses 97% Value vs BTC

Its strong ROI vs USD, growing value and high ROI have made it a top cryptocurrency. Although Bitcoin’s inflation hedge argument and store value argument are often speculated, BTC has proven to be a strong defender.

BTC: A Practical Inflation Hedge

Bitcoin was launched more than 20 years ago. Many investors now see it as a hedge against inflation.

Data presented by Finbold showed that the United States Dollar (USD), has lost 97.58% of its purchasing power in comparison to Bitcoin over the past five years. Comparing the USD’s value to Bitcoin, $1 now represents 0.000023 BTC.

It is interesting to note that USD’s purchasing power against BTC plummeted further after the COVID-19 pandemic. This was followed by a significant dip in March 2020 and another dip towards 2020. Satoshis are also evidence that the USD’s value has declined as a result of government continuous money printing.

A further drop of 75.24% occurred between February 1, 2020 and February 1, 2022 in the number of Satoshis you could buy with one USD.

Inflation has reduced the USD’s value by 85% over the past 50 years. This makes BTC a viable alternative to fiat money.

Investors face some difficulties due to market volatility and high prices for a single BTC unit. However, there are many alternatives such as Bitcoin mining backed ETFs that offer decent exposure over time.

The Digital Gold

Bitcoin is often referred to as digital gold and shares many similarities with traditional store-of-value assets such as gold.

A 2021 recent article outlined how the declining ROIs of Bitcoin markets over the years.

As the market matures, Bitcoin’s increasing correlation with the major indices-the S&P 500 Index and Nasdaq may play spoilsport to the coin’s inflation hedge narrative.

Bitcoin’s price is showing a 5% daily gain despite tightening Fed policies expected in March. With a 4.46% rise in the price of crypto, the global market cap was also heading towards $2 trillion.