is Bitcoin really a hedge against inflation?

[favaro]

I've been trying to understand Bitcoin’s role in today’s economy. Many people describe it as a hedge against inflation, but with its frequent price fluctuations, I sometimes wonder how reliable that claim is.
Now that interest rates are rising globally and liquidity is tightening, is Bitcoin still considered a dependable store of value, or is it more of a high-risk asset?
I’d really appreciate hearing from long-term holders  how do you currently view Bitcoin in terms of financial stability?

[Charles-Tim]

This chart answers your question:





On the chart, did you notice that bitcoin highest price is not more than $100000, but bitcoin is still more than $100000 as of today.

If you do not want to sell bitcoin in long term, it is a hedge against inflation.

[Findingnemo]

If you do not want to sell bitcoin in long term, it is a hedge against inflation.

Long run is the significant here,

@OP, I won't describe bitcoin as a store of value but it acts like one if we look at the price history the numbers are increasing cycle after cycle so it's not just a store of value but one of the bes performing asset that you can compare it with anything in this world and still bitcoin will atleast be in the top 5 no matter what the time frame you decide to compare with.

Buy bitcoin and keep HODLing.

[alani123]

Bitcoin as a hedge could be deemed based on past performance but it has not been stable.

Consider all the best markets it's been through the years. Another best markets could come or even bitcoin could collapse and never recover be it technologically or in terms of its user base. Nothing is certain. In terms of longevity bitcoin is very young against other hedges such as metals.

[hd49728]

This chart answers your question:





On the chart, did you notice that bitcoin highest price is not more than $100000, but bitcoin is still more than $100000 as of today.

If you do not want to sell bitcoin in long term, it is a hedge against inflation.

I don't look at Bitcoin price chart but I look at two other charts which show opposite trend of Bitcoin supply and fiat currency supply.

Purchasing power of the US. dollar over time.

How is the 21 milion Bitcoin defined and enforced?

If I can add one more chart, I would like to have this.
https://charts.bitbo.io/satoshi-per-dollar/

[Donneski]

Is Bitcoin really a hedge against inflation? Absolutely yes if you ask me. Bitcoin is not just a hedge, but a lifeline. With a fixed 21 million supply, Bitcoin is everything fiat money isn’t: scarce, decentralized, and immune to reckless printing. In different regions of the world where Bitcoin is being used, this isn’t theory, it’s reality. While local currencies collapse, Bitcoin has helped people preserve their value in something governments can’t touch.
Yes, it's volatile. But over time, it has outpaced inflation and crushed fiat in performance. If that’s not a hedge, I don’t know what is.

[Smartvirus]

I don't look at Bitcoin price chart but I look at two other charts:

Purchasing power of the US. dollar over time.

How is the 21 milion Bitcoin defined and enforced?

If I can add one more chart, I would like to have this.
https://charts.bitbo.io/satoshi-per-dollar/

Charts do say a lot really,
These show how inverse the both currencies have been over time and by far settles the argument on if Bitcoin could serve as a hedge against inflation or not. As it’s visually seen on these charts, it does happen over time which runs into years. Hence, everything comes down to what’s the plan you have for your Bitcoin investment in order to see it serve this purpose for you. Hodl for a long term and you’ll be proud of having taken such decision.

[LDL]

Bitcoin is definitely a hedge against inflation, an important feature here, especially since the supply of printed money is infinite, while the supply of Bitcoin is fixed at 21 million. If a country's government wants, it can increase the supply by printing money in any situation. Inflation will of course occur in this case, which is normal. But you cannot supply Bitcoin because the supply of Bitcoin is reduced by half every four years through Bitcoin halving.

Another important aspect of Bitcoin is that currently, various countries around the world are deciding to keep Bitcoin in their strategic reserves, which is putting a lot of pressure on Bitcoin. This is causing the price of Bitcoin to increase due to the limited supply. And it is becoming a fully competitive market that is not limited to dollars or other printed money. Another important feature of Bitcoin is its control system. Since it is a decentralized currency, its control system does not depend on any third party. If it depended on a second party, Bitcoin would never be able to work against inflation.

[PrivacyG]

How is the 21 milion Bitcoin defined and enforced?

This one really caught my interest.  At a first glance to the untrained eye, the two charts make Bitcoin look like it is only good for the first 1050 blocks and then it becomes as good as fiat.

Interestingly, no matter what happens to fiat in the future Bitcoin is still going to make it on top of USD unless we really stop using it at all or something else happens such as cyber attacks that would render it useless to the eyes of most users.  While the purchasing power chart shows USD is becoming less and less worth due to inflation, the Bitcoin chart shows it is at an even faster pace becoming not less worth but the opposite of what USD is bound to become, which is a worthless piece of artifically inflated currency that is currently on CPR because only this way can it keep surviving.

[Darker45]

A similar question was asked here just within the month. You might want to read the responses on that thread.

Anyway, for a similar answer, here's the movement of the value of the US dollar:


https://charts.bitbo.io/dollar-devaluation/

And here's for Bitcoin's:


https://charts.bitbo.io/dollar-devaluation/

We're not even speaking of other fiat currencies. The USD is a highly stable currency at that. So, compared to many others, that's already a good-looking chart. The rest have worse performance.

Bitcoin outperforms every single one of them. Of course, that's the logical outcome primarily because fiat is unlimited while Bitcoin has a fixed supply.

[odolvlobo]

Many people describe it as a hedge against inflation, but with its frequent price fluctuations, I sometimes wonder how reliable that claim is.

Bitcoin is a hedge against inflation because it has a fixed supply, or at least currently a supply growing less than the rate of inflation. In fact, most assets can be considered as hedges against inflation because their values are not dependent on the value of the currency. Debt is an example of something that is clearly not an inflation hedge.

A hedge is something that is not correlated (or at least not positively correlated), so price fluctuations are not relevant. What you are really asking is whether Bitcoin is a good hedge, considering it's volatility. In my opinion, if you are looking for something that is only a hedge, then Bitcoin is probably not the best. I think a better choice would be land or housing.

[DanWalker]

Is Bitcoin a hedge against inflation? First, you need to understand what an inflation hedge is.
In my understanding, an inflation hedge is an asset/investment that has the potential to retain or increase in value over time and protects us from currency depreciation. From that concept, it can be asserted bitcoin is an inflation hedge.

But it's not the only hedge against inflation, and it's also worth noting that it's quite volatile in the short term, so whether it's the best solution will depend on the circumstances. It will be the best hedge against inflation if you can hold it for the long term.

[yhiaali3]

As is well known, Bitcoin is volatile and unstable. But looking at the price chart over the past period, we see that fluctuations have been confined to a very narrow range between $98-110K. These are not considered significant fluctuations in the long term.

Also if we look at Bitcoin's behavior during the successive crises that have plagued the global economy, we find that it has been among the most relatively stable assets (with only minor fluctuations).

Hedging against inflation should be measured over the long term (several years), and looking at Bitcoin's history, we find that it has had a single upward trend over the long term. Therefore, in my personal opinion, yes, Bitcoin can be considered a store of value and a hedge against inflation.

[michellee]

With the situation now, I think Bitcoin is a hedge against inflation. That is because the price increase from low to high price start from the past untill now. If we invest in Bitcoin from a long time ago with just $1,000, our investment value will be bigger now.

While the things out there become expensive and make us difficult to buy it. But with Bitcoin in our hands, we can cashout our Bitcoin using small portion and we still have the big portion in our wallet. We can fills our needs without a problem because we can use our investment to do that.

That give profit to us as a long term investor in Bitcoin. It is why people now should start to have Bitcoin investment and use it for a long term investment. So that can useful for them in the future.

[hd49728]

Charts do say a lot really,
These show how inverse the both currencies have been over time and by far settles the argument on if Bitcoin could serve as a hedge against inflation or not. As it’s visually seen on these charts, it does happen over time which runs into years. Hence, everything comes down to what’s the plan you have for your Bitcoin investment in order to see it serve this purpose for you. Hodl for a long term and you’ll be proud of having taken such decision.

Fiat currencies and Bitcoin are all inflationary but Bitcoin has less considerable inflation than all fiat currencies globally. In addition, Bitcoin inflationare rate is halved after every 210,000 blocks or after about every four years while inflationary rates of fiat currencies only soar more dramatically with time.

This means time is an amazing factor that supports Bitcoin showing its strengths and win against hyperinflationary fiat currencies. The third chart shared above - Satoshi per dollar - shows how Satoshi purchasing power (also represents Bitcoin purchasing power) has been strongly increasing and beating fiat currencies.

[ranochigo]

In theory, Bitcoin is a hedge against inflation because of the deflationary property. In fact, any assets that can outpace inflation would be a hedge against inflation; ie. Stocks, Precious Metals, etc. This would be assuming that the demand of the asset remains consistent.

In the past, Bitcoin has gotten quite a push for mainstream and institutional adoption. These are key factors pushing Bitcoin value and I wouldn’t use them as evidence for now. We should observe a longer timeframe before we can make a good evalution.

[joniboini]

I've been collecting sats for the past few years, and I can say that the result is much better compared to saving that wealth in my bank savings account. Things will be different if the bear market hits, and I might lose a lot of wealth if I'm not prepared for it. But I can say that I'm satisfied with what Bitcoin does for me.

[BitGoba]

I've been trying to understand Bitcoin’s role in today’s economy. Many people describe it as a hedge against inflation, but with its frequent price fluctuations, I sometimes wonder how reliable that claim is.
Now that interest rates are rising globally and liquidity is tightening, is Bitcoin still considered a dependable store of value, or is it more of a high-risk asset?
I’d really appreciate hearing from long-term holders  how do you currently view Bitcoin in terms of financial stability?

Bitcoin is not a hedge against inflation  Bitcoin is the solution to inflation. It’s a completely new monetary system and a form of money in itself. If you follow the history of money, it evolved from Rai stones, glass beads, and whale teeth, to metals like gold and silver, then to banks and paper notes, and today’s digital fiat currencies. Bitcoin is the next step in that evolution.

Money was invented when people realized they needed a medium for exchange. If I have 100 kilos of apples and you have 10 kilos of fish, you might not want to accept 20 kilos of my apples for 1 kilo of your fish because you simply don’t need apples. Humanity needed something universal: a medium that everyone could trust and use to exchange value, and a reliable measure of value itself.

That’s why money also needs to be a store of value, so you can save it today and exchange it for goods or services you want in the future. These are the three functions of money: a store of value, a unit of account, and a medium of exchange.

In the Bitcoin system, there is no inflation  the supply is fixed, and over time, prices naturally fall. Bitcoin isn’t just another asset; it’s a monetary revolution.The problem throughout history was that we could never find anything in the physical world that was truly scarce, something that could reliably store value, that no one could simply “print” more of for themselves. It needed to be portable, divisible easy to verify, and durable  because if we chose apples to serve as money, they would quickly spoil. Gold was the closest we came to a solution.Gold was the closest we came to a solution, but it was never a perfect form of money. Some people exploited gold’s limitations to replace it with banks and paper money. Gold is difficult to transport, verify, and divide, which opened the door for trusted third parties to issue paper claims on gold  and eventually, to abandon the gold standard entirely. That’s how we ended up with today’s fiat money.

Bitcoin is a superior form of money  the first in history to possess all the key monetary properties: absolute scarcity, divisibility, durability, portability, and easy verifiability. For that reason, Bitcoin can fulfill all three functions of money something no previous form of money has ever achieved.

[EarnOnVictor]

Now that interest rates are rising globally and liquidity is tightening, is Bitcoin still considered a dependable store of value, or is it more of a high-risk asset?
I’d really appreciate hearing from long-term holders  how do you currently view Bitcoin in terms of financial stability?

The scarce truth is that there is no certainty here, it all has to do with the prices and your goal. Where you bought your Bitcoin and the purpose for which you bought it matter.

However, with respect to the past, Bitcoin was a hedge against inflation, but the past performance can never be used to judge the future outcome, especially when Bitcoin is now very expensive. It's easier when Bitcoin was still very cheap. Can you tell what the price of Bitcoin will be in the next 5 years? What if you bought it at $110,000 in 2025 for a 5-year cover against inflation, and in 2028, it gets to $140,000, and for correction's sake, in 2030, when you need your money, it moves back to $80,000, before moving higher to $170,000 in 2032 (2 years after you liquidated it)?

So, for me, Bitcoin is a very good asset, but as it moves higher in price, so is the risk and the reduced extent of trusting it as a hedge against inflation. For this, it's better for you to buy your Bitcoin as an asset without planning to hedge inflation and continue to HODL it.

[reagansimms]

High volatility often makes some people hesitate to consider Bitcoin as a safe haven against inflation. There are actually some very strong reasons why Bitcoin is a hedge against inflation, its fixed supply (21 million coins), decentralization and strong perception of value, so it is no wonder why most people consider Bitcoin to be digital gold.
Bitcoin also has unlimited potential for future value growth, its value has continued to soar in recent years, demonstrating Bitcoin's greater resilience compared to other traditional assets. Although Bitcoin's price can also be influenced by other factors in the global financial market, in the long term Bitcoin has shown strong resilience and continued growth by breaking previous ATH.