Bullish For Bitcoin: US Inflation Expectation Breaks Out From Decade Long Downtrend
Among the many reasons Bitcoin turned bullish in 2020, was primarily due to the sudden fear of inflation caused by unprecedented money printing. Each new round of stimulus money resulted in yet another massive rally in the cryptocurrency, helping fuel its rise from $3,000 to over $34,000.
Inflation expectation has been in decline ever since the Great Recession concluded, but the metric just broke out from a nearly decade long downtrend that began when Bitcoin was born. Will rising inflation fears keep the cryptocurrency’s price climbing long term?
Inflation Fears Run Amok, Could Cause Bitcoin FOMO To Pick Up Pace
Ever since the Great Recession, central banks have relied on quantitative easing to give the economy a shot in the arm. Each time this is done, however, the total circulating fiat money supply consisting of dollars, euros, yen, yuan and more, begins to inflate.
And as inflation occurs, the buying power of that money decreases. The normal 2% inflation rate is clearly at risk of increasing sharply, and the public is already starting to recognize that goods are beginning to cost more.
The buck – so to speak – is passed onto the everyday consumer who now has to either lower their standard of living or work more hours to compensate for the decrease in buying power.
It was the bank bailouts and money printing of the Great Recession that prompted the development of Bitcoin, and the cryptocurrency over a decade later is now being put to use as a hedge against inflation – the way Satoshi designed it to be.
And with US inflation expectations, according to Bloomberg data, breaking out of a decade-long downtrend, Bitcoin could soon become even more attractive than it already is to investors.
Bitcoin was designed to have certain attributes that made it similar to gold – an asset the cryptocurrency’s creator was particularly fond of. Chiefly, to ensure the decentralized coin was scarce, rare, and something people would want to “collect” Nakamoto hard-capped the supply at just 21 million BTC.