Help me understand this apparent contradiction between bitcoin and inflation

[AVE5]

Bitcoin is at the verge of decentralized currency with the potentialities of fluctuating known as volatility which the value of the currency goes UPs and DOWNs with the statistics of instabilities value rate.
The inflation in Bitcoin is an occurance based on when the supply is increasing over time. Apparently, the inflation nature of Bitcoin is not affected as a caused of economic breakdown such as that which has effect on the stock and the real estate investments.

[serjent05]

Bitcoin is at the verge of decentralized currency with the potentialities of fluctuating known as volatility which the value of the currency goes UPs and DOWNs with the statistics of instabilities value rate.
The inflation in Bitcoin is an occurance based on when the supply is increasing over time. Apparently, the inflation nature of Bitcoin is not affected as a caused of economic breakdown such as that which has effect on the stock and the real estate investments.

I believe the Bitcoin on the other hand is affected by an economic breakdown.  It may look like Bitcoin resist when inflation hits the economy but the longer this inflation surge stays, the more noticeable the effect of it on Bitcoin.  This kind of effect is hidden by the high volatility nature of Bitcoin because people think that the sudden drop of Bitcoin is normal because of its high volatility being a decentralized nature.  As one of the replies stated, having an economic breakdown decreases the capability of people to buy Bitcoin, and if they have Bitcoin, they might tend to sell it to make up for their financial shortage, thus the bitcoin market will have more supply than demand lowering its market value.

I'm going to try and explain it this way. Imagine 10 years ago you had $5,000 and you decided to save in a bank. Based on inflation rate today, the 5k will not have enough purchasing power because commodities are on the high side. But if you'd bought Bitcoin with 5k in 2014 at $1000, you'd have 5 BTC which in today's market value should be around $235,000. So bitcoin is seen to be an edge over inflation in long term because as the price of commodities are increasing, the price of Bitcoin is also increasing.

But what about if it goes the other way around?  If someone bought Bitcoin last 2021 when the market is at its peak then we can say that the logic you stated can't be applied to that situation. So I believe bitcoin being a hedge against inflation is situational.

[coolcoinz]

The main fault in the way people see it as inflation hedge and then get surprised by sudden ups and downs is that people who trade stocks also trade bitcoin and treat it like a stock, or a commodity.
If all stocks and commodities get hit by central bank's policies, so is bitcoin because people who invest in stocks get hit and have to sell everything they own, which includes cryptocurrencies.

If bitcoin was limited to being traded by normal people on exchanges and there was no demand from institutions you'd see much less stock correlation, but both average and top price would also be much lower. It's either this or that. You can stay in your little sandbox that bitcoin used to be in when the only exchange available worldwide was Mt.Gox, but then you'd still have low liquidity and would have to convert to USD first before you could buy bitcoin.

[Abu-Naim]

But if bitcoin is a hedge against inflation then shouldn't the bitcoin price rise when inflation goes up instead of going down?
I'm guessing the answer would be that inflation causes bitcoin price to go down in the short term, but in the long term causes it to go up? If so then why?

Inflation cannot affect the price of bitcoin in the way you are expressing it. If you hold bitcoin, you are somehow against inflation because the money you use to buy the bitcoin if you keep the money in your bank, inflation will affect the value of the money as it will not worth what it worth now if the inflation rate is, but if you hold bitcoin and the bitcoin pump, it will maintain its value and even add more value which is clearly against inflation.
Long term bitcoin investment is the best.

[The Cryptovator]

In my country, when inflation goes up, all foreign currencies, including the USD, go up. That means our native currency value has dipped due to inflation. So it's expected that the Bitcoin price will also rise when inflation increases. And due to the volatile behaviour of Bitcoin, it would rise more compared to foreign currencies. Usually, when inflation increases, we search for more income sources. As a result, those who are familiar with Bitcoin begin to accumulate it, causing the Bitcoin price to rise even further.

[justdimin]

But if bitcoin is a hedge against inflation then shouldn't the bitcoin price rise when inflation goes up instead of going down?
I'm guessing the answer would be that inflation causes bitcoin price to go down in the short term, but in the long term causes it to go up? If so then why?

Inflation cannot affect the price of bitcoin in the way you are expressing it. If you hold bitcoin, you are somehow against inflation because the money you use to buy the bitcoin if you keep the money in your bank, inflation will affect the value of the money as it will not worth what it worth now if the inflation rate is, but if you hold bitcoin and the bitcoin pump, it will maintain its value and even add more value which is clearly against inflation.
Long term bitcoin investment is the best.

That's basically what happens, OP is right and it happens and he thinks it doesn't. Inflation goes up, bitcoin price goes up as well. In fact, during 2021 bull run, inflation was high due to pandemic as well, one of the reasons why we peaked so high was the inflation too.

Stock market goes up during that time as well, since inflation goes up, the value of fiat goes down, which means you have "more money" but in reality you also have the same money because the money you have while may look higher, it also can buy the same things since everything went up. This is why it's quite important to make sure that people know what they are doing with these type of investments and do not really end up with any trouble on the long run.

[Nothingtodo]

In my country, when inflation goes up, all foreign currencies, including the USD, go up. That means our native currency value has dipped due to inflation. So it's expected that the Bitcoin price will also rise when inflation increases. And due to the volatile behaviour of Bitcoin, it would rise more compared to foreign currencies. Usually, when inflation increases, we search for more income sources. As a result, those who are familiar with Bitcoin begin to accumulate it, causing the Bitcoin price to rise even further.

Inflation in my country like yours causes the value of foreign currencies to increase massively. I can easily estimate if I compare the value of my country's money to the dollar ratio ten years ago. In 2014 one dollar was equal to 70 taka in my country but now one dollar is equal to 125 taka which is about 200 percent inflation. Earlier in my country the prices of daily necessities were within the purchasing range of peopleBut currently due to inflation people are out of purchasing power. But if transactions are done through Bitcoin, then I think it will be possible to reduce the amount of inflation to a large extent. As bitcoin is not legal in my country it is not possible to deflate inflation with bitcoin for now.

[JayTrain]

In my view, in the short term, inflationary pressures may trigger market panic and lead to a decline in Bitcoin prices as investors may prefer more stable assets. However, in the long run, Bitcoin appears more favorable during periods of high inflation due to its limited supply and decentralization. Thus, in times of rising inflation, the price of Bitcoin may begin to rise, despite a temporary dip in the short term.

[smelody]

The result of inflation is the short term effect the price of bitcoin because that time the total ecomomic situation was unstable. In the middle of 2023 the inflation of us was high that time bitcoin rate gradually in less the regular price.

In this situation US government taken some of decision like interest rate of 3.11 percent on its debt and continuing an upward trend in interest rates.When US Treasury bond yields rise, international investment in that country increases and the currency strengthens.Bitcoin price rise inflation of hedge between.