Bitcoin and deflation

[DaC0nsumeR]

Firstly, what you think is more likely as far as the macroeconomic situation: inflation or deflation?

If the latter, will that cause a massive Bitcoin dump to unexpected lows?

[stompix]

Firstly, what you think is more likely as far as the macroeconomic situation: inflation or deflation?

There is absolutely no chance of seeing global deflation short term, ignoring the money printing we experience a pretty rare economical situation when the economy needs to start, it wants to start and go back to normal, it is pushed with incentive but at the same time because of prolonged periods of shutdowns, a slowdown in activities and completely uneven break of supply chains around the world (for example the container situation) inflation will still be around for a while.

People want stuff, people still have the money to buy stuff but there is a shortage of it, until this clams down and an equilibrium happens again you won't be able to even dream of deflation. Some speculate we might see an artificial deflation period on annualized data compared to the park prices in May and June this year but it will be short-lived.

If the latter, will that cause a massive Bitcoin dump to unexpected lows?

Nobody has a clue what will happen, it's a crazy world, and one tweet right now moves the market more than economic reports, so probably what is normal won't happen. Many argue that deflation is good for gold as periods of deflation saw better returns in gold investment than periods of inflation but I doubt this will be the same for Bitcoin.

A slight downtrend at the news about the US entering deflation, maybe! A massive dump? No!

[Sayeds56]

Firstly, what you think is more likely as far as the macroeconomic situation: inflation or deflation?

If the latter, will that cause a massive Bitcoin dump to unexpected lows?

Deflation means increase in productivity and decrease in demand, it is very bad for the Economy because it means drop in  economic activity and GDP goes down.  Deflation happens when Prices of General goods and services are falling, The interest Rates are low and Gold price is falling. The charts of all of them are reflecting Downwards Trend that means Probability of deflation is  more than Inflation. Bitcoin has already corrected its price more than 55% from its ATH, further dump is unlikely to happen.

https://www.youtube.com/watch?v=73uJhiiABfk

[Tristan Bieber]

The current situation is inflation. The price of Bitcoin has fallen because of Musk’s announcement of the suspension of payment in Bitcoin, as well as the policy impact of China’s ban on mining, as well as the high inflation rate in the United States and excessive inflation. , Will defeat the value storage function of the US dollar. Bitcoin is the only store of value in a deflationary economy in the world. If there is an overheating global inflation, money will flow into Bitcoin quickly, and this may be an unprecedented Bitcoin bull market.

[bitmover]

Firstly, what you think is more likely as far as the macroeconomic situation: inflation or deflation?

There is absolutely no chance of seeing global deflation short term, ignoring the money printing we experience a pretty rare economical situation when the economy needs to start, it wants to start and go back to normal, it is pushed with incentive but at the same time because of prolonged periods of shutdowns, a slowdown in activities and completely uneven break of supply chains around the world (for example the container situation) inflation will still be around for a while.

Governments love inflation, because they make money out of it. So it is very likely we will forever live in global inflation world...

take a look here:

Under the federal tax code, the increase in an asset’s price is determined as the nominal amount (i.e., not adjusted for inflation). When an asset (often a stock) is sold above its purchase price, a gain is realized and is taxed. Any capital gain due to inflation is not accounted for, and the taxpayer is taxed on both their increase in income and on increases in prices economy-wide. As a result, the effective tax rate on the real (inflation indexed) capital gain has exceeded the statutory rate every year since 1950 and has averaged around 42 percent.
https://taxfoundation.org/inflation-can-cause-infinite-effective-tax-rate-capital-gains/

We pay more in capital gains... But that's not only when we lose and governments makes money out of inflation (that they generated)

Governments prints money and buy/invest in whatever they want, and our money loses value. We are basically paying for that money printing. This is also a subtle taxation, that is not clear to everyone.

There is a global mainstream idea that a little inflation is good and that deflation is bad, but it isn't. Individuals lose too much money in inflation. People who live in developing countries, specially in Latin America where it is common to see a 2-digit inflation per year, know that.

[thecodebear]

The entire fiat world is inflationary. There may be times where due to lack of demand there's short term deflation in terms of prices of goods, but more and more money is always being printed because governments no longer know how to budget their money so they have to constantly print more money to cover expenses. Inflation is only going to get worse in the long run. At some point there may be a brutal global economic reckoning that leads to hyper inflation. The only escape hatch for us as individuals is Bitcoin.

[pooya87]

If the latter, will that cause a massive Bitcoin dump to unexpected lows?

Inflation is inevitable because of the monetary policies all around the world. The real question is whether we are going to see inflation as before or is there hyper inflation coming?

During inflation and even more during hyper inflation, people will be looking to dump their fiat (since fiat is losing its value or purchasing power) and get something that is a good store of value so that they can keep the purchasing power they currently have instead of becoming poor by bag holding the same amount of fiat that won't be able to buy the same amount of goods as before.

Historically people have chosen gold, real estate and a lot of things like that. But ever since bitcoin was created it has been entering their "basket". As we move forward bitcoin becomes a more interesting store of value because it is a currency that can be used globally and its value is not linked to any other market. So for example the stock market could crash, gold could go under while bitcoin keeps going up. Historically this fact meant bitcoin was excellent for diversification.
During inflation more people will find bitcoin attractive and will buy it hence its price will go up.

[hazenyc]

If the latter, will that cause a massive Bitcoin dump to unexpected lows?

Inflation is inevitable because of the monetary policies all around the world. The real question is whether we are going to see inflation as before or is there hyper inflation coming?

During inflation and even more during hyper inflation, people will be looking to dump their fiat (since fiat is losing its value or purchasing power) and get something that is a good store of value so that they can keep the purchasing power they currently have instead of becoming poor by bag holding the same amount of fiat that won't be able to buy the same amount of goods as before.

Historically people have chosen gold, real estate and a lot of things like that. But ever since bitcoin was created it has been entering their "basket". As we move forward bitcoin becomes a more interesting store of value because it is a currency that can be used globally and its value is not linked to any other market. So for example the stock market could crash, gold could go under while bitcoin keeps going up. Historically this fact meant bitcoin was excellent for diversification.
During inflation more people will find bitcoin attractive and will buy it hence its price will go up.

I think what makes Bitcoin even more interesting than gold in a world of turmoil and increased individual mobility is the fact that you can take your Bitcoin with you everywhere in the world without having to carry another bag at the airport or having to fear getting your gold seized by a bank because you get caught escaping from a certain country. Bitcoin is highly mobile and agile and the simplest way to carry wealth all around the globe.

In regards to inflation Bitcoin will play a vital role in the future and its acceptance will only grow from here. I don't see a situation where I think the overall acceptance we have now achieved might somehow degenerate.

[jossiel]

Firstly, what you think is more likely as far as the macroeconomic situation: inflation or deflation?

If the latter, will that cause a massive Bitcoin dump to unexpected lows?

Bitcoin isn't exempted for dumps and that's why there's always a balance that you must look at it for every certain markets. There could be a manipulation that has happened but if there's a massive pump, don't forget the opposite that can happen.

What we see today has been caused by various FUD that has been spread and many have thought of it as the sign of bearishness of the market. But eventually, we're seeing the uptrend of bitcoin and it's bound to deflate because of its features.

[TheUltraElite]

Firstly, what you think is more likely as far as the macroeconomic situation: inflation or deflation?

Chance of having a deflation is very low. It is mostly inflation all the time because of the system of printing fiat.

If the latter, will that cause a massive Bitcoin dump to unexpected lows?

No, firstly deflation is very low possibility. Theoretically if deflation would happen, the effect on bitcoin price might be that lows. But this chance is very low because that deflation would need a complete system revamp which is practically not possible.

Hence whether deflation occurs or not, we can say one thing for sure, inflation in fiat is always going to happen. Hence buying bitcoin is a logically correct step to making profit. Still you will need to have fiat at hand.

[davis196]

Firstly, what you think is more likely as far as the macroeconomic situation: inflation or deflation?

If the latter, will that cause a massive Bitcoin dump to unexpected lows?

1.If you take a close look at the history of the global economy-Inflation is the norm,deflation happens once in a while.
2.Inflation cannot cause a massive Bitcoin dump.I think it's quite the opposite.Inflation can cause a BTC pump,but the influence of inflation over the Bitcoin price is overestimated.
I also think that macroeconomic inflation has little to do with the volatility on the Bitcoin market.
Money printing can pump the BTC demand,but this is only a small and short term effect.

[Sayeds56]

Firstly, what you think is more likely as far as the macroeconomic situation: inflation or deflation?

If the latter, will that cause a massive Bitcoin dump to unexpected lows?

1.If you take a close look at the history of the global economy-Inflation is the norm,deflation happens once in a while.
2.Inflation cannot cause a massive Bitcoin dump.I think it's quite the opposite.Inflation can cause a BTC pump,but the influence of inflation over the Bitcoin price is overestimated.
I also think that macroeconomic inflation has little to do with the volatility on the Bitcoin market.
Money printing can pump the BTC demand,but this is only a small and short term effect.

Well said. Deflation happens rarely and as far I know it happened in Bulgaria, Croatia, Greece, Poland, Spain, Sweden  and few years back in japan, as well, and rest of world is facing inflation. Inflation can certainly pump Bitcoin as huge money will be available to buy Bitcoin but what can really affect the BTC Price  is behavior of Stock Market, there is very strong co-relation between Bitcoin and Stock Market. As Bitcoin Investors we should closely monitor Stock Market. Any dump in stocks will certainly trigger huge selling in Bitcoin.