Bitcoin Forum

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Can it be maybe also the fact that the inflation slowing down can be a sign that the recession was - at least for now - avoided and everybody starts putting to work the liquidity they may have been keeping at hand for the dark days?
Plus, the trend is pretty clear now, which can increase the appetite of the investors.

I am curious to know how long you feel a pattern should exist, before there can be said to be a correlation between two variables.

There have been correlations between bitcoin and other assets, which lasted for a while, but they eventually decoupled and proved to just be temporary similarities in investor behavior.

This is just my curiosity, there would always be a link between consumer spending, inflation and purchase of assets like bitcoin.

- Jay -

I never heard about bitcoin price been affected by inflation either directly or indirectly, bitcoin price is extremely determined by the market demand and supply but what makes them both isn't the role of the inflation on the general parallel market, if we are to compare bitcoin as well with other commodities in the market serving as assets or trade items bitcoin is over beyond their control without being affected by what those centralized institutionizations have on their market price with bitcoin.

I am also baffled by the relationship of CPI and Bitcoin.  I never imagine how the thing with CPI can affect Bitcoin since most people never give a good reason that can explain the uptrend of Bitcoin is caused by the slow down of inflation.  They just tell us that this thing happen so the price of Bitcoin is uptrending.  Like where is the common root between the two?

Anyway  I do think institutional investment has a huge contribution on the current uptrend of Bitcoin.  Since with institution piling up demands on Bitcoin, it is obvious, with the supply and demand rule, that Bitcoin will surely uptrend because much money is coming in to eat the sell order and push the price of Bitcoin up.

Bitcoin is commonly considered as a possible safeguard against inflation, as it has a finite supply and is not controlled by any central authority. In contrast, inflation erodes the value of traditional fiat currencies over time, reducing their purchasing power. However, the correlation between Bitcoin and inflation is intricate and can be influenced by market volatility, and the effectiveness of Bitcoin as an inflation hedge is a topic of discussion among specialists.

Inflation is slowing down because we are in recession and due to bull whip effect. Definitely not because of "soft landing (https://bitcointalk.org/index.php?topic=5438020.msg61707367#msg61707367)"

1970-1980 was very similar. Thats how asset prices (SPX) reacted to inflation back then.

https://i.imgur.com/f0fNrBh.png

in 1970 we had first inflation peak (market hit bottom 2 months later)
in 1972 we had inflation short term bottom (market reach new ATH 3 months later)
in 1974 we had new CPI peak above 12% (market created new low eacly in the month of CPI peak)

Than, >1975 market just stop gamble inflation data and ignored next inflation peak but pumped like crazy as it was going back down.

Exactly the same we have now. Inflation is going up, assets are going down, people predict the worst-case scenarios. Inflation goes down, assets pump people wait for FED pivot not buying the bottom. Inflation reach short term bottom, FED do pivot, retail buy the local top. Inflation goes up, assets goes down, retails are broke.

Unlike traditional currencies, which are subject to inflation, BTC has a limited supply. No more than 21 million bitcoins can be mined in total, making it decentralized and inflation-resistant. ::)

That's by far not expected unexpected. Institutions have more likely (and bigger amounts too) liquidity saved to buying at bottom whatever they can (usually competitors, but Bitcoin is also very appealing at this price).


My economics background is not strong enough to check this. Whether the recession is avoided (again: for now) or we're in deep sh#t and they're covering it, I don't know and I guess that there are (oh, so) many in this situation (of not knowing the difference).


Interesting. And what you think Bitcoin price will do in this equation? Will it follow the other assets and will go down again big time?

Edit: fixed typo

The crux of the matter is that inflation does not equal CPI.

The CPI is designed to stop people from being outraged and protesting to their politicians.

What is not often mentioned about inflation is the important asset inflation part. Between 2010 and 2020 there was hardly any CPI growth in Europe while the banks were printing. Where did much of that money go: into assets, especially real estate, bitcoin and others.

Now the working classes are feeling the effects of the printing, and of other causes, such as the increase in the cost of energy, but before this period they were like the frog that is being slowly cooked and does not realise it, because whoever wanted to buy a house in 2019 cost them much more economic effort, counting in terms of net annual salaries than their parents' generation, and that is when interest rates were much lower in 2019 than in the 80s and 90s.

The value of Bitcoin may fluctuate, but it is not related to inflation. Rather, it is related to supply and demand, news, and industry events. Some experts believe that since Bitcoin is still in an early stage of development, its value may continue to rise in the future. :-*

Not every asset acted the same. So far everyone is looking at inflation, interest rates and sp500/nasdaq as next bitcoin move indicator so I used SP500 in above post. But interesting thing happened to gold during "The Great Inflation" 1965–1982. In 1971 Richard Nixon depeg USD from gold and gold had the biggest pump ever. From 35$ to 900$ in a decade (while stocks were going sideways). If the same would happened again and bitcoin would fallow gold we could see a pump to 1 mln $ (x30 from now). But to be honest i don't think its the most likely scenario. More likely one is that we will be stuck for a decade in 20-60k consolidation. Something in between seams to be the most likely one.

In short term I expect everything to be bullish until inflation hit short term bottom (next few months). Somewhere around CPI=2-4%. Is 2-4% possible? In my opinion it is. And inflation bottom (before new wave to new inflation ATH) should be around JUN and market high in APR/JUN. "sell in May and go away" should be a good strategy this year.

https://i.imgur.com/6TSbpvx.png
https://www.statista.com/statistics/216037/monthly-percentage-of-change-in-the-cpi-u-in-the-us/

Annual inflation is close to sum of all candles. So we can see that each next month big candle goes away and new small one comes in. So to see official CPI increase in next months we need to have >.6% M/M change in FEB. >.8% in next month etc. So its likely to see an official CPI going down for at least next 3 months. 1 month flat and 2 more months down (if we will not see covid 2.0, nuclear war etc.).

The value of bitcoin can fluctuate, but it is not related to inflation. Rather, it is related to supply and demand, news and industry events. Some experts believe that because bitcoin is still in its early stages of development, its value could continue to rise in the future. ;)

BTC can also be useful for people living in countries with high inflation, such as Venezuela or Argentina. It can help them preserve the value of their money and avoid a devaluation of the national currency......

While for short term I cannot argue, I don't think that it'll go too high this year (and whether the high point will be in May or later I don't know), on long term (decade) you seem to have missed the halvings and the ever increasing difficulty; this cannot be sustained for 10 years only with max 60k price (and usually lower).


Please edit and merge your posts instead of making consecutive ones. May worth reading the forum rules too (https://bitcointalk.org/index.php?topic=703657.0).

However, Bitcoin is not a panacea for inflation. It has its own risks and drawbacks, such as high volatility, lack of legal protection, storage risks, and others. ;)

Interesting observation but I can't think of a reason why it is so. Bitcoin was designed to tackle inflation, it's actually a safe haven against inflation, so why not people invest more in Bitcoin during heaviest inflation periods? Very weird.  ???

People are mad with their minds and reactions.

Last year, they were fearful about FED and their decisions.
This year, they are fearful about recession.

Inflation problems should be seen a few months after the pandemic when many governments poured the global market with their huge QEs but people just denied that fact. They waited many months later to start feeling fearful that is lagging.

From what FED did, I think they don't do anything quickly after one night. Before they launch something, they try to test market reactions with fud and they will vaguely talk about their probable plans for near future. They did it before increasing interest rate and they're testing market reactions again before they decrease interest rate. Sooner or later they will do it, maybe more than next 6 months but it's not a matter for Bitcoin diamond hands and real hodlers.

A global recession is something that is bound to happen, I think.  I think the Fed also saw the market reaction and they also have done something related to the global recession.  At this time we have seen how the economic impact and how the world economy is currently.  I have seen many people who have experienced difficulties and many workers who have lost their jobs.  The market on a micro scale has been moving very slowly and that has made economic turnover in the wider community also run slowly.  I don't know how the impact of recession and inflation will be on the macro scale like multinational companies but on a small scale I see it that way.  People seem to be struggling to survive.

An article for countries with highest inflation rates, double digit
https://www.visualcapitalist.com/mapped-which-countries-have-the-highest-inflation/

https://www.visualcapitalist.com/wp-content/uploads/2022/12/mapped-worlds-highest-inflation-rates.jpeg

This is correct if we assume some variables are constant.

1- mining efficiency thanks to Moore's law. Its no longer double each 2 years but its still an exponential grow. We can have slowly growing hashrate without price going up. Mining efficiency is not constant.
2- demand stays the same so price have to go up when supply goes down. But demand is not a constant and supply goes down a little % of a whole supply. Its not like during first/second halving:

My point is that each halving has lower fundamental impact. In about 100 years we will cut mining rewards from 2 sats/block to 1 sat/block (the very last halving). I don't think that price will double thanks to this only because miners rewards are getting cut by half (from 0.00105 BTC/ year to 0.000525 BTC/ year while whole supply is 21M). At that day no one will care about halvings. I thinks we have 0-3 halvings left that will have any impact on price. Although i know its not very popular statement in crypto community.

3- the fact that hasrate has to go up. In fact it dosn't. We can be at the top of first hashrate cycle and now a decade going sideways.

Ooohhh, so sorry. I've fixed now my other post too. It was a typo there. I meant "That's by far not unexpected."
I hope now it makes more sense. Yes, they started buying and as the bullish trend becomes something beyond doubt they're expected to increase their sales. We're on the same page  ;)


You're right about the far future, but we're not there yet. The amount obtained from tx fees is still small compared to the block reward. And will still be so after the next halving.


The advance in technology still happens. Intel has entered the game and I think that they've made a much more comprehensive research than you and me. And if this step is expected by them to cover the costs and also bring them very good returns, that means that the hash rate will still grow in the near future. So again, your logic may be right for a farther iteration, not for now...

Hey look, this govt funded entity posted statistics to make it appear as if inflation is going down!!  ;D ;D ;D
You cannot be so easily fooled can you? Inflation is not something that just goes up and down it is permanent, you cannot take inflation out of the current centralized monetary system and anyone who really believes you can is a moron.

So this proves when inflation goes down the price of Bitcoin will rise and ironically when it goes high the price even get higher unless the price of Bitcoin affected by other factors.

Bitcoin on the rise no matter what, one more valid proof to hold Bitcoins over fiat at whatever situation it is.

They are a hardwere producers not a miners. So they care to sell x amount of units not about how profitable they are. Am I wrong here?



You are right that example I posted shows very far future. My point was to show the end-game that we are heading too. How negligible the last halving will be. So the good question is where are we now? We know that first halving (reduce inflation from 25% to 12%) had huge impact on price and was fallowed by a 100x pump. Second one (from 9% to 4,5%) was fallowed by a 40x pump. Third halving (from 4% to 2%) and a 6x pump. 4th halving will reduce inflation from 1.5% to 0.7% and its possible that we will do only a 2-3x pump or not if markets will be disturbed by recession or WW3.

5th halving and we will cut inflation from 0.6% to 0.3%. Does it matter? Especially if we evaluate bitcoin in a currency that inflation changes by 1% in a month/month basis.

I know the narrative, that miners wont sell at loss so price have to go up. But price will go up only if we assume that demand is constant. Which is not. It can go down as well and those miners that did not sell at loss wont have cash to pay for bills and will go bust reducing difficulty for others. Other miners will mine cheaper bitcoins that they will sell at profit even lower. Difficulty doesn't have to go up all the time.

I'm not saying that bitcoin will not reach new ATH. I'm saying that all 3 scenarios posted above are possible and the fact that we will have halving in next year doesn't change that.

Miners have to sell their bitcoins to pay their electricity bills especially small miners who can not have good budget to hold their bitcoins in bear market. Miners who have bad financial management and take too high leverage in bull market will not only have to sale off their bitcoins but will also face with bankruptcy.

Miners have miner capitulations (https://bitcoinmagazine.com/business/bitcoin-miner-capitulation-could-set-price-bottom)

It will, if not in 2024 it will make a new all time high in 2028 or 2032.

I believe in controlled supply (https://en.bitcoin.it/wiki/Controlled_supply) and good adoption growth of Bitcoin, its demand will only become bigger. Price will have to rise and new all time highs have to occur.

What you write makes sense to a certain extent, as inflation can indeed indirectly affect the value of Bitcoin. For instance, it can erode the purchasing power of fiat currency, prompting investors to seek refuge in Bitcoin. Therefore, it can indirectly cause an increase or decrease in the value of Bitcoin

How does inflation benefit BTC? I thought that the more inflation on the dollar the poorer people are getting and the more likely they are to look for an alternative? Inflation happens because of printing off money and the government needs to pay that back and they rely on the people to pay it back with increased inflation costs. If the inflation reduces it means they are not printing as much money off and the economy will be more affordable and stable and people will not look for an alternative currency.

We need inflation to continue rising so that the people get tired of the rising costs and look for deflationary currencies and BTC is 1 of the only currencies which is designed to be deflationary and we will get more adoption because people will find us because of the rising inflation cost.

In other words, inflation and recession have not affected the journey of bitcoin and this has been proven time and time again. The total availability of bitcoins creates a demand on the economic relationship (Supply and Demand) in its course, while the supply decreases causing the bitcoin price to increase, and moreover many holders do not release bitcoins and continue to accumulate them for the long term, so that demand is only available on a few exchanges.

The fact is that bitcoin allows investors to limit their exposure, so that when confidence in fiat currencies wanes in the midst of a recession and ongoing inflation, many people will move their assets to bitcoin. I think these two variables are quite close to the actual analysis. Possible!!!!

Nice job on highlighting the correlation between inflation and the price, op! Some time ago, it could have actually been surprising to me. My intuition around 2019 was that an economic crisis would hit soon, major fiat currencies would collapse via hyperinflation, and that's when the world would realize that Bitcoin doesn't suffer from that, can't be overprinted, and can save wealth when the economy is suffering. Interestingly, my intuitions were completely wrong, as when inflation hit the top currencies, the panic spread to other markets, including cryptos, and when things started looking better, people started feeling more confident about investing money in stuff, particularly in Bitcoin.

I talk about mining ASIC chips. I don't know if they make the miners too or only the chips and it doesn't matter much in this discussion. Even if they're only the chips, they have no other use than for mining Bitcoin or similar coins, hence being used inside mining hardware.
And they can sell a good number of units only if mining stays profitable. Else the mining businesses will certainly not invest into new hardware... At least this is how I see the things.
The Intel miners (ASIC chips or full devices, whatever) are a novelty, but I doubt people (and businesses!) will only buy them as collectibles  ;)


This math is actually not too bad. But this means the next pump will go 2-3x from the last ATH (if no recession or bigger war). And this contradicts the initial statement that in the next decade (meaning 10 years) the price stays in the 20k-60k range.
So what I've missed or where we don't understand each other?


That's correct. Still, the history has shown for now that the difficulty went down only for rather short periods of time and this trend seems to still be strong. For how long? I don't know, but, again, it breaks that 20k-60k range prediction.


Franky1 has some interesting calculations he posts here and there. According to those, now the minimum price for obtaining bitcoin (by the miners) seems to be at about 15k (maybe 16k).
The halving will make that minimum price become 30k (maybe 32k), hence I think that it's still the main fuel for the next massive pump (or bubble).
As I said, your long term calculations are not bad, still, last block (777359) had 6.25BTC block reward and less than 0.25BTC tx fees; the tx fees are still not a big enough percentage of the total income to make a real difference. I think that the problems you're telling about will really happen only when the tx fees will become larger then the block reward.

The problem with CPI is that it is a flat out manipulated lie.

The results of this depend on the people who are reading CPI. Like what they would do once the CPI results are already out. I think it's a highly complex case knowing that there are a lot of factors to consider

I think of it this way:
- If there's a high CPI rate, then they would be looking for a hedge against inflation; hence, markets that are best for hedging, like BTC and real estate, would go up. The results of this would cause the other markets, like stocks, to plummet.

It's hard to pinpoint because there's no right trend based on the graph provided. You can see the CPI increased and decreased, but there's no solid information given. It's still circumstantial, right?

it's good, but we still need to wait until FED will lower rates because economy is still in danger and something could breakdown any day now. So be carefull buying crypto right now.

I think you are seeing patterns in things that act naturally to important announcements in the Press. We know that some people regard Bitcoin as a store of value, so they might react to negative news on the inflation rate. They might look at Bitcoin or Gold to protect their wealth, but I think more institutional investors are shifting their wealth to Gold.

The inflation statistics are manipulated on a continuous basis to boost the global economy, so I will not just rely on that to determine my trading decisions.  ::)

This is the gift that Satoshi Nakamoto gave to us, it is indeed an opportunity have another option to hedge ourselves from the rising inflations that is almost uncontrollable and then profits afterwards for choosing bitcoin as an option. Apart from that, when the factor is just about inflation, there's just less risk that bitcoin will eventually goes higher because lots of people will begin to choose bitcoin to avoid inflation.

It seems that you are trying to find a correlation where it doesn't exist.
Inflation is slowing down because:
1.The supply chain disruptions get solved and the global economy is adapting.
2.Increased interest rates by the big central banks.
3.Reduced demand for some goods, which pushes the inflation levels down.
4.The expectations of a recession are still strong.
The Bitcoin price is going up because:
1.There aren't any major FUD news.
2.No big crypto company has went bankrupt/hacked/exit scamming.
3.The US dollar lost a part of it's value in comparison to the first half of 2022. This means that one BTC is worth more USD than before, because USD is cheaper, not because BTC became more expensive.

But all this intel discussin is to prove that bitcoin can't go down because big company can't be wrong by investing in mining chip technology. But history is full of such mistakes. Like KODAK or NOKIA. Nvidia also made many mistakes trying to fulfill ETH miners needs during ICO bubble in 2017.


Its not from ATH but from halving date price. So if we will have halving @ 30k, its possible to bounce from last ATH.


Agree. Predicting a reversal of a strong 10 year trend is most often a mistake. But its also worth to mention that bitcoin was created in 2009 (after GFC) and existed only during a decade of booming economy and globalization. I'm not so sure we are booming now and will be in next few years.

Nothing is certain. There are only probabilities.

Honestly, I checked and couldn't see the two top highest ones, were they omitted because they have high inflation? Argentina and Turkey has officially the highest ones, these are nations that reached 100% levels officially, probably a lot more considering governments would want to hide it as much as they possibly can.

At the end of the day, it is not an easy task to have something like this going on, 100%+ is surreal, imagine paying double for everything, and that's the average, which means somethings got three four times more expensive as well. Lowest inflation is fine, I wonder how the people from highest inflation actually feels about crypto.

That's probably because when inflation rate is high, people with money take refuge in assets like Bitcoin to save their money from getting inflated. Similarly, when the inflation rate is low, people start saving up but again with the fear of inflation, they don't do it in traditional ways but modern ways of saving like buying and storing Bitcoins.

Either way, it's a win-win for Bitcoin and it's admirers with global economy dropping or growing, we will always see significant growth over time for Bitcoin. More and more institutions will see this change and will surely get around Bitcoin and try to leverage to technology in their own favor.

Bitcoin isn't the stablest asset either few days back it was trading around 25K now its in mid 23K so there is loss of value and its huge compared to the inflation rate even if its extreme that volatility beats the value in a day vs per annum.

But looking at the chart its going up after every cycle that's why people recommend HODL so there will be high returns in next few years and don't panic for everyday market movements.

Whoever has recently been in the market, he will worry about such movement of prices, but who has already seen several cycles, he can perceive this normal, because each time even in bear market the price remains higher than in the last cycle. On the global graphics, we are still at the bottom, and now the most important thing is not to sell, patience and Hold will bring profit in the future.

Honestly, I don't think so. You can never say for sure that we are avoiding inflation until we will come out of this crisis. But from what I see, we are not avoiding it and are probably in a recession right now. The problem is, inflation is not going down despite rate hikes, if you will look at the latest PCE and CPI, you will see that inflation went up 0.1% which is bad news because the fed pivot already started so ideally we should see inflation steadily going down.
So we are still in a bad place right now cos rates are high, the economy is suffering and inflation is still going up.