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[Symmetrick]

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[NeuroticFish]

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.

[un_rank]

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 -

[Dunamisx]

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.

[BitDane]

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.

[blindersyndicate]

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.

[Tytanowy Janusz]

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.

Inflation is slowing down because we are in recession and due to bull whip effect. Definitely not because of "soft landing"

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



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.

[Alex Bozhko]

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.

[NeuroticFish]

I watched the latest reports on crypto investments and found that the main purchases of the same bitcoin occur at the expense of institutional ones. That is, the growth from 15k to 25k that we are now seeing can be called institutional, as in the second half of 2020.

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).

Inflation is slowing down because we are in recession and due to bull whip effect. Definitely not because of "soft landing"

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).

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.

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

[Don Pedro Dinero]

I used to hear opinions that bitcoin helps in case of rising inflation, but this chart breaks this idea of ​​the market, since during the growth of CPI, bitcoin also reacts negatively to these events.

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.

[Alex Bozhko]

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.

[Tytanowy Janusz]

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?

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://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.).

[Alex Bozhko]

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.

[Alex Bozhko]

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......

[NeuroticFish]

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.

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.

[Alex Bozhko]

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.

[serveria.com]

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. 

[tranthidung]

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.

[Godday]

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.

[UchihaSarada]

I found an interesting infographic for 2022, which shows the inflation rate in different countries:

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