If Bitcoin Isn’t an Inflation Hedge, What Is It?

[Livingleged]

We know that Bitcoin is a hedge against systemic and sovereign risk rather than inflation. its broader value proposition remains intact and role as a digital gold and a neutral, global financial asset that is particularly attractive in a world of capital controls.

In this context, do you think Bitcoin’s price will be less responsive to short term inflation information?

It is definitely a hedge against inflation without any doubt from what I’ve seen known and passed through if you compare it to fiat in the past few year you’ll realize how inflation has eaten up the value of those fiat currency while bitcoin gain more value regardless of its price fluctuation due it volatility. there for it is for sure a hedge against  inflation without any doubt and any other saying might not go well with me as I will disagree.

[death69]

The inflation hedge thing was always a gateway drug, not the destination. Individuals required a common reference point to know why Bitcoin was important. Wwe gave them one: it is as gold but digital, it keeps you out of money printing. True enough in a narrow sense. However. it flattens what is really occurring.

The actual role of Bitcoin is a valid exit. Get out of money policy you did not agree to, of monetary systems that spy on and marginalize, of the belief that money should be political. One of the symptoms of those underlying issues is inflation.

The price will do what it does. The network does not stop either way. It is the one that counts, I suppose. The rest is nothing but people trying to explain something that does not fit well into old categories.

[YOSHIE]

In this context, do you think Bitcoin’s price will be less responsive to short term inflation information?

In general, you can see expectations of changes in interest rates and prices of goods at any time which causes inflation to increase, that is the purpose of Bitcoin being created and designed to fight inflation, the real reason Bitcoin is a safe asset as a store of value.

This can be proven, Bitcoin was created to have a limited supply, fixed supply, decentralization, and liquidity because it is one of the forces and efforts to protect against inflation, As is known, Bitcoin only halves once every four years, Overall, it can be said that Bitcoin is a strategic step to hedge against inflation as seen and occurring currently.

[Hyphen(-)]

In this context, do you think Bitcoin’s price will be less responsive to short term inflation information?

For short term inflation I don’t think Bitcoin price will highly responsive to inflation because the market can be manipulated sometimes and it do take some times to recover and take the right path, so it depends on how long you are referring to as your short term duration.

If you want to get the main benefit of Bitcoin in all aspects be it inflation or high profit, you need to hold your Bitcoin for long period of time, minimum of 2 years so that another cycle will come and the price will have effect to either halving, bear and bull market, and you will be able to know the right thing to do when you see the profit you will have. But investing for sort term will not give you big profit and might not even save you from inflation.

[Z-tight]

BTC is a hedge against inflation, but what it is not is a safe haven asset. BTC is very volatile and you could purchase it to hedge your funds against inflation and right the next day it loses 30% of its value. A new investor would be going crazy if that happened to them and they will be cussing whoever spoke to them about BTC. But if this investor is in for the long term and ready to be patient, then in the long run they would find out that BTC has done exactly what they bought it to do.

However, precious metals like gold and silver remain the most suitable option if you seek a safe haven asset to protect your funds from inflation. Or you seek an asset that is immune to political actions and economic situations.

[JeffBrad12]

What you say makes a lot of sense, and in fact, until recently I thought like you, but now I have my doubts. If we look at it solely from a profitability standpoint, then yes, it would be. But one characteristic of inflation hedges is that they at least maintain their value, if not rise, when there is conflict, and over the last year we have seen that this is not the case. The most recent example is Trump's statements last week about Greenland, saying he would impose tariffs on anyone who opposed him. This caused Bitcoin and the US stock market to fall, while gold broke records once again.

If we only consider profitability, we could also say that the Nasdaq 100 is a hedge against inflation, because if you had invested those $100 15 years ago, today you would have $1,100.

Bitcoin right now have the characteristic that is similar to stock. It thrive on a good sentiment market with economic stability. Even though stock market is falling, stock is still considered as a good and reliable long-term hedge against inflation because the current fall is nothing but temporary.
Same thing with bitcoin and the recent market that feels delayed to gold. Truth is, gold keep rallying because people are afraid to put money into a bit riskier asset and the phenomenal growth that gold is having causes chain effect to attract people into investing more. It seems the word hedge against inflation of today is more like everything that doesn't just go down endlessly and bitcoin is one of them.

[Rustam Meraj]

Bitcoin is also in growing stage where price is no longer as affected by short term price rise information with CPI as market has already allowed for fact of long lasting inflation and also lowered short term price swings by about 30%. Other than reacting to small changes in value of dollar, job of Bitcoin is becoming more of Global Fair Savings or System Insurance, where value of money is set by government risk, global debt records, and rise of money trade wars in EU and Asia.

In my point of view now market will be more affected by world cash flow and large changes in world politics than to money news. As one big bank will fail or government take things, then market will tend to jump up even though inflation rates remains at same rate, which will lead to rise in price of Bitcoin as big scale insurance.

[G_Besar]

We know that Bitcoin is a hedge against systemic and sovereign risk rather than inflation. its broader value proposition remains intact and role as a digital gold and a neutral, global financial asset that is particularly attractive in a world of capital controls.

In this context, do you think Bitcoin’s price will be less responsive to short term inflation information?

This cannot be accurately determined by anyone, as the responsiveness of the Bitcoin price depends on the level of Bitcoin purchases by many people under any circumstances, including the short-term inflationary conditions you mentioned. Bitcoin will continue to experience unpredictable price movements as long as transactions continue to occur in the market, and I believe that transaction volumes can fluctuate year-on-year under any circumstances, which could impact market entry.

[Darker45]

Shouldn't inflation be considered part of systemic risk? Inflation isn't a problem in the sense that it isn't something that's avoided. It's an integral part of the current financial system. It isn't something that's solved because it isn't a problem, to begin with. It's a feature. It isn't a bug in the system. It's deliberately made part of the design. Bitcoin somehow protects us from that.

Inflation moves slowly but surely, so it may not seem a big deal in short spans of time. But it accumulates over time. In which case, Bitcoin is best to be kept for a long period of time. It doesn't respond to regular inflation rates. Its relevance is in the simple fact that there's inflation.

[AprilioMP]

We know that Bitcoin is a hedge against systemic and sovereign risk rather than inflation. its broader value proposition remains intact and role as a digital gold and a neutral, global financial asset that is particularly attractive in a world of capital controls.

In this context, do you think Bitcoin’s price will be less responsive to short term inflation information?

Many users use Bitcoin as an investment asset because Bitcoin has proven to be a hedge against fiat currencies, which are more commonly known in situations where the economic system experiences inflation. Bitcoin is even considered to be digital gold because gold is a physical asset that has proven to retain its value over many years.
Basically, Bitcoin is an electronic cash system.

In the short term, I am not very responsive because the hedge value of an asset is not in the short term but in the long term.