If inflation is rising, why isn't crypto more valuable now?

[Abiky]

The US Dollar's inflation is on the rise as the pandemic coupled with the Russia-Ukraine crisis have damaged the global economy. Any negative effects on the US Dollar will surely affect other countries' economies, since it's the world's reserve currency. Considering that inflation has increased at a fast pace since the start of 2020, scarce assets/commodities like Gold and Bitcoin should've increased tenfold by now. Yet, Bitcoin is struggling to reach a new All-time-high in price while Gold's been unable to get past $1.9k. In the crypto market, Bitcoin is the one cryptocurrency that moves everything with it. So if Bitcoin goes down, so will the rest of the other coins being traded on the market.

My question is why isn't crypto rising in price if inflation on major Fiat currencies have soared like crazy? Am I missing something here? It's a shame since Bitcoin was long hailed to be a safe-haven asset like Gold. Your input will be greatly appreciated. Thank you.

[Wind_FURY]

Because the Fed is tightening the balance sheet through QT and rate hikes, causing investors and speculators in risk assets, like stocks, commodities, and cryptocurrencies to sell.

But ser, in Bitcoin's situation, ZOOM OUT. It has increased by MORE than ten-fold from under $1.00 to more than $10,000, and in my opinion, still in its path of price discovery to $100,000.

[NeuroticFish]

My question is why isn't crypto rising in price if inflation on major Fiat currencies have soared like crazy? Am I missing something here? It's a shame since Bitcoin was long hailed to be a safe-haven asset like Gold.

Most crypto don't rise and should never rise because they're scams, or full of bugs, or both.
So let's just turn to bitcoin. And bitcoin price does rise, but it does it in waves. As said, zoom out. A pretty good comparison for Bitcoin may be to compare the price every 4 years. You'll see them rise.
Inflation is also just a number you don't feel clearly in the same way for everything. Bread price may have went over the roof and meat price may not feel the inflation yet. It's just an example, it doesn't have to be accurate (I'm almost sure it isn't). But inflation makes electricity more expensive and - sooner or later - that has to become visible in the price, else certain miners will have to unplug their gears.

Also, never forget that gold is overrated, since it's not so scarce and we don't even know for sure how scarce it is in the universe (I don't think that it's easy to count how many suns have exploded since the big bang, and that's what creates gold).
And.. just look at the charts, gold is falling lately: https://www.tradingview.com/symbols/XAUUSD/

[Dunamisx]

Any negative effects on the US Dollar will surely affect other countries' economies, since it's the world's reserve currency.

It really affects many countries even as we speaks, but i think the major cause is the currency in use, USD as you've said is the world reserve currency and US is experiencing inflation which implies indirectly that the whole world is hold to ransom by participating in the ongoing inflation except for those that true their economy byepass fiat currency and make use of bitcoin, it is earlier the better every country to see bitcoin as a currency that can evade the impact of inflation on their economy system. thereby adopting it.

[fiulpro]

Crypto is valuable. What do you define the value with ? There are certain things that are still very important to consider:
1. Long term investment
2. Alternative option as contrast to government lead investment opportunities
3. Better online job opportunities
4. Very valuable for trading right now
5. Presenting an amazing buying opportunity for investors ( Lower the price higher will be profit perse)

I think crypto is extremely valuable and you cannot just define it using things like: 'its price' I know the usability is different in different parts of the world but it's still a good option and during inflation all the markets are hit.

[Charles-Tim]

Yet, Bitcoin is struggling to reach a new All-time-high in price while Gold's been unable to get past $1.9k.

Gold all-time-high is $2,074.60. Although, the price on exchanges would be different but yet similar.

In the crypto market, Bitcoin is the one cryptocurrency that moves everything with it. So if Bitcoin goes down, so will the rest of the other coins being traded on the market.

Yes, if bitcoin is increasing in price and marketcap, altcoins are also going to be increasing in price and marketcap as well.

My question is why isn't crypto rising in price if inflation on major Fiat currencies have soared like crazy? Am I missing something here?

Let me be specific and only focus on bitcoin because many altcoins are shit and dead coins.

Bitcoin was once worth less than $1
Bitcoin grew over $1, $10, $100, $1000, $10000.
Bitcoin now at $30000

Check this also:
Price high 2017 $19700
BTC Price low 2018 $ $4040
BTC Price high 2019 $ $13970
BTC price low 2020 $ $3800
BTC price high after 2020 halving $ $69000
Now at $30000

It is clear that bitcoin is a speculative asset but a save haven in long term.

It's a shame since Bitcoin was long hailed to be a safe-haven asset like Gold.

If you invest bitcoin in long term, like 4 years or more, it is a safe haven. If you invest on bitcoin in short term, like 6 months or a year, it is a speculative asset.

There is nothing bad to hold bitcoin in long term, then, you will realize that it is a safe haven.

[kaya11]

The US Dollar's inflation is on the rise as the pandemic coupled with the Russia-Ukraine crisis have damaged the global economy. Any negative effects on the US Dollar will surely affect other countries' economies, since it's the world's reserve currency. Considering that inflation has increased at a fast pace since the start of 2020, scarce assets/commodities like Gold and Bitcoin should've increased tenfold by now. Yet, Bitcoin is struggling to reach a new All-time-high in price while Gold's been unable to get past $1.9k. In the crypto market, Bitcoin is the one cryptocurrency that moves everything with it. So if Bitcoin goes down, so will the rest of the other coins being traded on the market.

My question is why isn't crypto rising in price if inflation on major Fiat currencies have soared like crazy? Am I missing something here? It's a shame since Bitcoin was long hailed to be a safe-haven asset like Gold. Your input will be greatly appreciated. Thank you.

As you look closer, Bitcoin in 2017 is last quarter of the year it was nearly 20k, now inflation hits hard and it is around 30k USD. If you compare them in terms of purchasing power, the difference is not too far and what you can buy with those money you will only have a little bit of now. I was wondering also why is it like this, did bitcoin really is the future that most of us are awaiting for? I guess it should be at the price of a hundred dollars or more at this moment but it ain't giving us hope as we see it.

[bitzizzix]

I think the main way bitcoin is designed to contain inflation, as supply is limited and known and the creation of new bitcoins will diminish over time in a predictable way.
and there will only be 21 million bitcoins, and every four years the number of bitcoins mined is halved and if you look at bitcoin in the long term, I think bitcoin is easy to predict. Because bitcoin's next long term goal is to reach 100k and this is good to be able to protect their wealth and also to protect themselves from inflation.

[yawars20]

With almost 10% inflation per year from last few year, USD sure lose so much value and it seems it is going to do same for coming years too but it doesn't mean crypto will go the other way. To better understand the reason we first have to know what is causing inflation of money and how it is also effecting crypto too.
Like any other physical currencies, Crypto is also invested by peoples and if those who are investing are affected by money inflation then the crypto itself heavily effected too and this is what happening now. Crypto only rises when the investor go all in but with current situation everyone is playing safe and don't want to take risk in crypto so it is going down each day for now.

[Hydrogen]

The answer to this question can be observed in the history of crypto pump and dumps.

Over the years there have been many cases where whale investors targeted low trading volume assets. Low trading volume makes it easier to break down natural market mechanic barriers to price manipulation. This makes it easy to get in. Jack up the price of an asset. And get out with a good profit.

While it is harder to achieve this with assets like bitcoin that trade in higher volume. It is still an achievable goal for big institutional investors who trade in the highest volumes.

As bitcoin has become more available to large institutional investors, its price trends have come to mirror the stock market.

Traders with the most liquidity are trading bitcoin as if it were a stock, rather than an inflation protected asset. That is the primary reason behind our current trends.

[batang_bitcoin]

We just did a major increase for the crypto market for the past two years and as we know, whenever it happens then the correction should come next.
Well, right now, it's not just a correction but a probable bear market that should exist for an estimation of a year or lesser than that, hopefully. Do not worry, the crypto market especially for the specific ones won't go nowhere but to that valuation and opinion that you have said that they should be high due to inflation.

[KingsDen]

First, bitcoin is a cryptocurrency, but it is in a different class from the rest of the cryptocurrencies. So, it will be right you direct the question to only bitcoin.

Secondly, let me answer based on bitcoin. Most times we see bitcoin from a short term rise and fall but on the long run, bitcoin has overall being in a bullish trend since it's creation.

Thirdly, bitcoin react to the happening in the economy. It doesn't just rise and fall at will. It is me and you that will push bitcoin to $100,000. Either there is more adoption of bitcoin or me and you will be ready to buy about x3 of what we own currently to push bitcoin higher than it's ATH.

Finally, when there is inflation, we tend to care much of what we will eat and survive. It is he that has fed well that will think about investment. So, if the economy is fine bitcoin will flourish along side. Everything is interdependent.

[The Sceptical Chymist]

Yet, Bitcoin is struggling to reach a new All-time-high in price while Gold's been unable to get past $1.9k.

I have a feeling that a lot of what we're seeing in the markets, i.e., crashes/corrections/you-name-it, has more to do with interest rates rising and the fact that asset prices had risen to sky-high levels over the past 10+ years and those kinds of trends never continue forever.  Prices had to come down to earth eventually.

The Russia/Ukraine conflict probably has something to do with it as well.  Oh, as far as gold not being able to break $1900, I'd say that sounds about right to me.  I'm not even sure why it's worth as much as it is these days, but what I've noticed is that investors don't seem to be flocking to precious metals when economic conditions become uncertain or unstable--at least not as much as they used to.

If I had to give a glib answer to the question posed in the thread title, I'd ask if you remember what bitcoin was selling for when the COVID pandemic hit (which seems like only yesterday).  If you use that as a point of reference, you'd probably be happy with bitcoin at $30k.

[adaseb]

Pretty much what was said in the first reply. It’s trading like a risk on asset and tied to the stock market especially the tech stock index the nasdaq 100.

Until we see any type of decoupling it will keep following it. Many market makers and arbs are pretty much following the nasdaq and copying any major moves. So until we get a disconnection somewhere, where crypto rises and nasdaq is flat or downwards. It will be bearish.

[Wind_FURY]

Pretty much what was said in the first reply. It’s trading like a risk on asset and tied to the stock market especially the tech stock index the nasdaq 100.

Until we see any type of decoupling it will keep following it. Many market makers and arbs are pretty much following the nasdaq and copying any major moves. So until we get a disconnection somewhere, where crypto rises and nasdaq is flat or downwards. It will be bearish.

The more Bitcoin becomes more "mainstream", with more and more mainstream investors coming in that are more learned about the legacy financial system, then I believe Bitcoin will be more correlated with mainstream markets than we have witnessed before. It's simply part of the evolution of a technology being accepted by society, like the internet, the telephone, or air travel. But will that stop Bitcoin from its price discovery to six digits? NO, there are some features of Bitcoin that have not been priced in yet.

[Abiky]

Because the Fed is tightening the balance sheet through QT and rate hikes, causing investors and speculators in risk assets, like stocks, commodities, and cryptocurrencies to sell.

But ser, in Bitcoin's situation, ZOOM OUT. It has increased by MORE than ten-fold from under $1.00 to more than $10,000, and in my opinion, still in its path of price discovery to $100,000.

That sucks. I thought Bitcoin's price moved regardless of what happens in the real world. But now, it moves along with the stock market and what actions central banks do against the economy. This way, Bitcoin and other cryptocurrencies cannot serve as an alternative to the current financial system. There are still a lot of people who don't know anything about Bitcoin, so I'd say we're still in the very beginnings of crypto's mainstream adoption.

With what happened with LUNA lately, it's going to take a little longer before the crypto market rises back to its former glory. As long as everything remains decentralized, there should be nothing to worry about. Just my opinion

[Findingnemo]

Inflation hit the fiat prices hard but what it actually does is made the consumer goods and services to be more expensive than what the government data shows which means people are spending more money so less money in their hands to save and invest which is one of the reason why cryptocurrency isn't rising as the hike of inflation and the next reason could be the bear cycle, we might entered into the bear cycle a long way back but hike in the inflation put a gradual growth which nullified the sudden dump of bear cycle.

[stompix]

My question is why isn't crypto rising in price if inflation on major Fiat currencies have soared like crazy? Am I missing something here? It's a shame since Bitcoin was long hailed to be a safe-haven asset like Gold. Your input will be greatly appreciated. Thank you.

Well, the answer is pretty simple.
For any assets to rise you don't need inflation or deflation, you need something else, and that's ....ta dam!!!! Money!
You need people to buy more bitcoin with more $ than the ones willing to sell for $ and on top of that you need to take care of a certain 30 million, a daily problem in blocks mined.  

Now, totally contrarian to the popular belief, when do people like to invest and risk money? When their job is secure, they have cheap food and rent and transportation, no crisis insight, or when they face unemployment, they spend half of their wage on basic necessities, they are afraid they might not afford food or even the rent when they are concern with the rising cost of raising a kid?
So, despite nearly everyone thinking we need a new ww3, economic crisis, famine, plague or other to see BTC rise to a new ATH, once you don't need a few million to do so but trillions, you need people with money and with no concern of losing that money at all, not a scared middle and lower class that throws 5$ a month on some altcoin.

That sucks. I thought Bitcoin's price moved regardless of what happens in the real world. But now, it moves along with the stock market and what actions central banks do against the economy. This way, Bitcoin and other cryptocurrencies cannot serve as an alternative to the current financial system.

Why not? Why would you expect bitcoin to go against this trend, just because it's an alternative?
A bicycle is an alternative to a car but it still has round wheels and you drive it on a street and you get fined for not having a light or a helmet!

Bitcoin is based on trust, the trust of being only 21 million, the trust of knowing there won't be more printed, the trust of knowing those are your coins, but at the same time, trust can be shattered, and this is what's happening now, some believe the value should be lower and their numbers offset the ones that think the opposite.
It's the perfect free market based on what people think and not what somebody else decided for them!
But not everybody likes a free market when it's going down!

[Flexystar]

Bitcoin isn't full proof investment right now. Most of the money which is into bitcoin economics is coming from the institutional investors and other whales. Obviously with the current market crash they need to compensate their real world assets and the only way to do is by selling off the bitcoin and using the fiat for the same.

I don't think there is any easier explanation to this rather than this. However, its also trendy these days, as the market goes down in real world, it hampers bitcoin drastically. It will come back as the economics settle in circulation from these big players.

[TheNineClub]

The US Dollar's inflation is on the rise as the pandemic coupled with the Russia-Ukraine crisis have damaged the global economy. Any negative effects on the US Dollar will surely affect other countries' economies, since it's the world's reserve currency. Considering that inflation has increased at a fast pace since the start of 2020, scarce assets/commodities like Gold and Bitcoin should've increased tenfold by now. Yet, Bitcoin is struggling to reach a new All-time-high in price while Gold's been unable to get past $1.9k. In the crypto market, Bitcoin is the one cryptocurrency that moves everything with it. So if Bitcoin goes down, so will the rest of the other coins being traded on the market.

My question is why isn't crypto rising in price if inflation on major Fiat currencies have soared like crazy? Am I missing something here? It's a shame since Bitcoin was long hailed to be a safe-haven asset like Gold. Your input will be greatly appreciated. Thank you.

Crypto is inherently tied to FIAT and what's going on with the economy, it's not in its own bubble. In times of economic distress (inflation, food shortages, war, overblown housing prices et.) people tend to buckle down, and that means not investing in anything. And BTC is not even close to being a safe haven since it's volatility and its low utilisation in the real world is definitely something that will turn away people who want to escape the harsh economic situations. Nor is gold or anything for that matter. What most people are worried about is how they will pay their bills and food, and BTC can't really help with that (that much). So to sum it up, crypto rises when regular people start investing, but when the economic situation worsens, those people tend to stay on the sidelines and what crypto is left with are investors who have money for investing and are not worried about it having to be a solution for a specific economic problem they have. And as we see, those people are not enough.