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[yhiaali3]

It is natural that all markets are affected by each other, when inflation occurs it will be followed by deflation due to the decrease in purchasing power of people, so they will not be able to buy more bitcoin and this will necessarily lead to a deflation in the crypto market as well, perhaps this is what happened, although it is supposed That people go to buy bitcoin as a hedge against inflation, but perhaps people are still afraid of the volatility of crypto prices, especially after the recent incident.

[arallmuus]

As a person who lived most of my life in a country with a pretty volatile economy and some years of very high inflation (like 40% high), I think that most people won't notice the 8.6% inflation. First of all, it doesn't directly translate into the same price growth.

Well actually it does, starting from the price of fuel that has been increasing then groceries will as well and so that would affect the cost of living as well. Everything does connect and although it might seems small but eventually it could be an issue if no action is actually taken to suspend the increasing rate of the inflation.

Secondly, it can be a bit corrected by increasing salaries.

It does but with the increasing price of fuel I kinda doubt that business owners would actually increase the workers salaries

Thirdly, you are unlikely to notice a change like that, not unless you're already from a very vulnerable group and barely made ends meet.

This is sad but true at the same time because everything just seems expensive when you are barely making it

[Sithara007]

It is natural that all markets are affected by each other, when inflation occurs it will be followed by deflation due to the decrease in purchasing power of people, so they will not be able to buy more bitcoin and this will necessarily lead to a deflation in the crypto market as well, perhaps this is what happened, although it is supposed That people go to buy bitcoin as a hedge against inflation, but perhaps people are still afraid of the volatility of crypto prices, especially after the recent incident.

Back in 2021, one of the reasons why Bitcoin went up by so much was because of the stimulus cheques. A lot of people received the cheques and decided to purchase Bitcoin or other cryptocurrency using that amount. But the situation has changed now. As a result of inflation and rising fuel prices, ordinary people are running out of money. They don't have spare money to invest in "luxury" options such as Bitcoin. This is the main reason why Bitcoin crashed from a peak of $67,000 per coin to the current level of $28,000 per coin.

[adaseb]

It is natural that all markets are affected by each other, when inflation occurs it will be followed by deflation due to the decrease in purchasing power of people, so they will not be able to buy more bitcoin and this will necessarily lead to a deflation in the crypto market as well, perhaps this is what happened, although it is supposed That people go to buy bitcoin as a hedge against inflation, but perhaps people are still afraid of the volatility of crypto prices, especially after the recent incident.

Back in 2021, one of the reasons why Bitcoin went up by so much was because of the stimulus cheques. A lot of people received the cheques and decided to purchase Bitcoin or other cryptocurrency using that amount. But the situation has changed now. As a result of inflation and rising fuel prices, ordinary people are running out of money. They don't have spare money to invest in "luxury" options such as Bitcoin. This is the main reason why Bitcoin crashed from a peak of $67,000 per coin to the current level of $28,000 per coin.

It’s not the reason why it crashed.

Last year we all knew that fed would raise rates to combat inflation. Everyone knew all the crypto and stock markets would peak.

People are basically getting into safer risk off assets and Bitcoin is considered an risk on asset like stocks. Hence why it highly correlated with tech stocks.

Bitcoin is not the only thing that dropped.

[Hispo]

-snip-

-snip-

It’s not the reason why it crashed.

Last year we all knew that fed would raise rates to combat inflation. Everyone knew all the crypto and stock markets would peak.

People are basically getting into safer risk off assets and Bitcoin is considered an risk on asset like stocks. Hence why it highly correlated with tech stocks.

Bitcoin is not the only thing that dropped.

Will there be a chance FED started raising it again in order to contain the inflationary numbers?

I ask this because I have seen on the News that they have already recognize to be wrong about the inflation being transitory, etc. They even admited there will likely be a long inflation period in the USA.

What are they going to do about it?

I have been seen people on Fox News to suggest this inflation was intentional so the USA government (which is a major debt holder) can pay its debts at discount, with inflated USD. That sounds crazy to consider if you ask me 

[adaseb]

They stopped saying it’s temporarily like 3-4 months ago. Now the markets are going to see what happens on Wednesday and see if a 75bps hike is going to happen.

If a 75bps hike is on the table then the markets will go down further. Because many are going to get out of risk on assets into more safe havens.

The way it’s looking it seems best to stay cash and be able to buy stocks and real estate when they are cheap when the market finally bottoms.

[NotATether]

The cryptomarket is supposed to grow against the inflation due to its limited supply, but here the market is experiencing the downturn as the inflated currencies.

The currency is theoretically resistant to inflation. But the problem is that people are not realizing this and think "if fiat currencies are inflating then so to must be cryptocurrencies" and they dump their coins, and their actions are reinforced by past downtrends of cryptocurrencies, correlated to inflation rises, which themselves were due to weak hands and this unsound thinking.

This stuff is going to keep happening until BTC gets enough customers, shops & terminals for people to deal with it exclusively without an intermediate fiat currency like USD or EUR.

[Z-tight]

and their actions are reinforced by past downtrends of cryptocurrencies, correlated to inflation rises, which themselves were due to weak hands and this unsound thinking.

If i understood you correctly NotATether you are referring to fud here, isn't it quite normal with any and every volatile asset, of which bitcoin is one, some people purposely spread this fud, and some purposely move large sums from their wallet to exchanges, just to cause fud, and to probably buy cheaper when there is the resultant downtrend. Bitcoin is deflationary, but volatility is ever present cause people will always panic.

This stuff is going to keep happening until BTC gets enough customers, shops & terminals for people to deal with it exclusively without an intermediate fiat currency like USD or EUR.

That is going to be in a very long time i suppose, well those who really understand bitcoin and are stronger hands will continue buying from the weak hands till that time, it is in their favor in the end.

[The Sceptical Chymist]

Over the last six months to a year, I've seen prices of things increase at a rate that's alarming--and I'm generally not easily alarmed by stuff like that, since I'm a pretty frugal person by nature.  But damn, a standard-size bag of Cheetos is now well over $5, and that's more than a gallon of gas (but it seems to be a race between those two things). 

This is a problem created by the government which no doubt they're going to attempt to solve.  Unfortunately I have a sinking feeling that their solution is only going to cause more financial pain.  And without delving too far into politics, I just want to say that I'm hoping Biden doesn't get re-elected.  I do realize that inflation is a global problem and that it isn't his fault that the world is in this state, but I don't think he has any capability to lead the US out of this inflation *soon-to-be* crisis.

[KingsDen]

This is a problem created by the government which no doubt they're going to attempt to solve.  Unfortunately I have a sinking feeling that their solution is only going to cause more financial pain. 

What a paradox!

The governments of different countries behave in a similar manner. Sometimes I wonder if they meet occasionally and decide how they will manage their respective countries. I have watched keenly in my country how the government in countless occasions created problems from vacuum and then spend resources to solve an induced problem, which definitely will end in bigger pains.

I am young and energetic, that is the reason I am always thankful to God for making me to be part of this industry. I am most hopeful that if decisions about Bitcoin can be made without some central authorities, it therefore mean that one day the common man can be part of the governing system of their country through blockchain concensus.

[Sithara007]

Looking at the volume of money that the central banks printed during the COVID time, I am surprised that the inflation rate is not any higher. Just 8.6%? Are we sure that these guys are not lying? The M1 money supply went up by like 4-5 times. The population remained the same (or slightly decreased as a result of deaths from COVID), and that means that there is 4x or 5x more money available for everyone. Naturally, I would have expected inflation rate in the vicinity of 100% or 200%. If that is not happening, then the reason maybe that most of the money ended up with people who are not supposed to receive it.

[bittraffic]

They stopped saying it’s temporarily like 3-4 months ago. Now the markets are going to see what happens on Wednesday and see if a 75bps hike is going to happen.

If a 75bps hike is on the table then the markets will go down further. Because many are going to get out of risk on assets into more safe havens.

The way it’s looking it seems best to stay cash and be able to buy stocks and real estate when they are cheap when the market finally bottoms.

Its like Cardi B asking When y'all think they going to announce that we going into a recession?

Yep they only say it when its pretty much obvious already. The inflation does affect every country so we're all in this together. I hate to say it but crypto market is adding the stress lately because it didn't act like a hedge anymore. Felt deceived. 

[Hispo]

Looking at the volume of money that the central banks printed during the COVID time, I am surprised that the inflation rate is not any higher. Just 8.6%? Are we sure that these guys are not lying? The M1 money supply went up by like 4-5 times. The population remained the same (or slightly decreased as a result of deaths from COVID), and that means that there is 4x or 5x more money available for everyone. Naturally, I would have expected inflation rate in the vicinity of 100% or 200%. If that is not happening, then the reason maybe that most of the money ended up with people who are not supposed to receive it.

From what I have seen on internet, the function

Inflation(Money_Supply)

is often modeled as a lineal function or combination of lineal functions of the type

f(x)= bx+c , the critical part of this type of function is the slope "b".

Maybe, in the case of the current USA economy the function between the money supply and the inflation has a very low slope at the time being, a fraction of the unit (1).

If I could have access to monthly FIAT emission data and montly inflation data, I could estimate de slope of the function.
Do you know where I could find such information?

Maybe the inflation is not as high as you could have anticipated because some big companies are keeping big reserves in cash, let us remember that during the pandemic there were news about how companies and the rich were earning much more during those times.

If the average American spent their stimulus check on a basket of essencial goods, it would not be strange that all money ended up in the pockets of big players like Walmart, which have decided to keep the cash until now and therefore, out circulation. Who knows, this could be a deal between these big players and the US government/FED.

[Minecache]

The cryptomarket is supposed to grow against the inflation due to its limited supply, but here the market is experiencing the downturn as the inflated currencies. The inflation keeps rising and it has come out big all of the sudden as people have started to move after a long term work from home. During those time period the food price rise didn't make a big impact. By the time the transportation too is limited and now everything is getting to be normal and the impact is getting high. It is a slow process to get solved. More countries will join the queue soon.

Bitcoin is seen as an anti-inflation asset, but with the current situation, it has not been able to promote that. High inflation leads to higher interest rates, volatile assets like bitcoin and cryptocurrencies will be under great pressure, people will sell and seek safe havens like dollars. In the long run, it is beneficial to hold bitcoins as the price of bitcoin always increases year by year but in the short term bitcoin is not a good solution to avoid inflation.

[ningrum]

The cryptomarket is supposed to grow against the inflation due to its limited supply, but here the market is experiencing the downturn as the inflated currencies. The inflation keeps rising and it has come out big all of the sudden as people have started to move after a long term work from home. During those time period the food price rise didn't make a big impact. By the time the transportation too is limited and now everything is getting to be normal and the impact is getting high. It is a slow process to get solved. More countries will join the queue soon.

Bitcoin is seen as an anti-inflation asset, but with the current situation, it has not been able to promote that. High inflation leads to higher interest rates, volatile assets like bitcoin and cryptocurrencies will be under great pressure, people will sell and seek safe havens like dollars. In the long run, it is beneficial to hold bitcoins as the price of bitcoin always increases year by year but in the short term bitcoin is not a good solution to avoid inflation.

So far, Bitcoin has not been able to guarantee it as an anti-inflation asset,
in the midst of inflation that is happening in almost all countries, the crypto market is also currently back down and the price of Bitcoin is down to $22k,
this shows that in the short term it is too risky and Bitcoin is not the right choice to avoid inflation as you say

[Kakmakr]

The cryptomarket is supposed to grow against the inflation due to its limited supply, but here the market is experiencing the downturn as the inflated currencies. The inflation keeps rising and it has come out big all of the sudden as people have started to move after a long term work from home. During those time period the food price rise didn't make a big impact. By the time the transportation too is limited and now everything is getting to be normal and the impact is getting high. It is a slow process to get solved. More countries will join the queue soon.

I disagree...

When the Inflation goes up, people are paying more for goods and services... so they go into survival mode and they do not have disposable funds to invest in speculative high risk investments like Bitcoin.

The influence of the war in the Ukraine are only being felt now, because food production has been disrupted. We have been using wheat and oil that were stockpiled, but the new crops will suffer..do to the shortage of fertilizer from the Ukraine and the smaller exports from Russia.   

[Sithara007]

So far, Bitcoin has not been able to guarantee it as an anti-inflation asset,
in the midst of inflation that is happening in almost all countries, the crypto market is also currently back down and the price of Bitcoin is down to $22k,
this shows that in the short term it is too risky and Bitcoin is not the right choice to avoid inflation as you say

As far as the algorithm (controlled supply) doesn't change, Bitcoin will remain as an asset that is protected against inflation. I will not give too much importance to the short term fluctuations in the exchange rate. As of now, I don't think that there is any valid reason for Bitcoin to go down in exchange rate versus the US Dollar. The former is protected against inflation, while the latter is about to undergo hyperinflation as a result of all those trillions printed during the COVID season. That said, for those who are looking for short term returns, Bitcoin may not be the right asset.

[be.open]

They stopped saying it’s temporarily like 3-4 months ago. Now the markets are going to see what happens on Wednesday and see if a 75bps hike is going to happen.

If a 75bps hike is on the table then the markets will go down further. Because many are going to get out of risk on assets into more safe havens.

The way it’s looking it seems best to stay cash and be able to buy stocks and real estate when they are cheap when the market finally bottoms.

Let's be honest, raising the rate by 75 basis points (ie 0.75%) will not solve the inflation problem in the US. Let me remind you that in 1980 the Fed had to raise the rate to 20% to curb inflation after the oil crisis. Now the Fed, in my opinion, needs to raise the rate to at least 10% in order to bring the situation with prices under control, but this will lead to disastrous consequences for the stock market and cause a whole wave of corporate bankruptcies, not to mention enormous difficulties for the US government to service external debt.

[Beparanf]

So far, Bitcoin has not been able to guarantee it as an anti-inflation asset,
in the midst of inflation that is happening in almost all countries, the crypto market is also currently back down and the price of Bitcoin is down to $22k,
this shows that in the short term it is too risky and Bitcoin is not the right choice to avoid inflation as you say

As far as the algorithm (controlled supply) doesn't change, Bitcoin will remain as an asset that is protected against inflation. I will not give too much importance to the short term fluctuations in the exchange rate. As of now, I don't think that there is any valid reason for Bitcoin to go down in exchange rate versus the US Dollar. The former is protected against inflation, while the latter is about to undergo hyperinflation as a result of all those trillions printed during the COVID season. That said, for those who are looking for short term returns, Bitcoin may not be the right asset.

Technically speaking you are right. Bitcoin is designed to avoid the inflation which is fiat main disadvantage, however Bitcoin is valued in fiat and it will always be connected to fiat so even if its long or short term, Bitcoin will still be affected by inflation not directly but once fiat value decrease, Bitcoin value will decrease because fiat is what people used to buy it and gives value on it. Bitcoin value is only derived from speculation because there's no asset with real value backing its price that's why a simple FUD can affect already Bitcoin price due to speculation.

[Sithara007]

Technically speaking you are right. Bitcoin is designed to avoid the inflation which is fiat main disadvantage, however Bitcoin is valued in fiat and it will always be connected to fiat so even if its long or short term, Bitcoin will still be affected by inflation not directly but once fiat value decrease, Bitcoin value will decrease because fiat is what people used to buy it and gives value on it. Bitcoin value is only derived from speculation because there's no asset with real value backing its price that's why a simple FUD can affect already Bitcoin price due to speculation.

I don't think that in the long term situation will remain the same. There is a good chance that Bitcoin will become independent of fiat. Already in two countries (El Salvador and Central African Republic), Bitcoin is legal tender along with fiat currency. In due course of time, we will witness Bitcoin becoming the sole legal tender in at least some of the countries. And this is a first step towards Bitcoin becoming independent of fiat currency. Anyway, all this seems to be impractical in the short to medium term. I will watch patiently, as more and more countries legalize Bitcoin and adopt it as the legal tender.