Many people are seeing bitcoin as a potential hedge against inflation, but as of late, that sentiment is growing, largely because of Jerome Powell, head of the Fed.
Bitcoin Could Potentially Surge in the Coming Weeks
As the U.S. Federal Reserve chairman, Powell will be speaking this week at the annual Jackson Hole conference in Wyoming. He’s expected to lay down the law and instill a new set of rules and regulations that will potentially bring inflation in the United States even higher. Among these measures will be more “relaxed” ways of “managing price pressures,” which are slated – according to financial regulators – to bring inflation back to a relatively normal level later down the line.
Meanwhile, the Fed has announced that it will permit inflation to run higher than the average two percent for a short period. Many are concerned this is going to backfire, and that the methods designed for taking on inflation are coming at the wrong time as the coronavirus is still running rampant. Mati Greenspan – founder of Quantum Economics and former analyst at crypto exchange e-Toro – explained:
Especially at the current time, for the Fed to announce that it’s about to actively devalue the money in people’s accounts doesn’t seem like a great idea. As it is, with all the stimulus going on, people are already questioning the value of money. The Fed is basically playing with fire here.
Meltem Demirors of Coin Shares fame had similar sentiment, explaining that while assets like stock shares are surging through the roof, this is a huge sign that the dollar has shrunk in value, and thus surging asset prices are not always the best way to determine how an economy is doing. Meltem says:
While people are celebrating the stock market and real estate values being at all-time highs, what they don’t recognize is that it isn’t assets being worth more, but dollars being worth less.
Matthew Dibb, co-founder of Stack – an index funds provider in Asia – believes that cryptocurrencies are likely to surge even higher considering how weak the dollar has become in recent months. Bitcoin, for example, is already up more than 60 percent since the beginning of the year, and he’s confident this could be the start of something much bigger for the world’s number one digital currency by market cap.
The major impact for crypto out of this symposium would be a change in monetary policy and further depreciation of the U.S. dollar, which could propel bitcoin higher.
Sending Inflation to Record Highs
Nigel Green of financial advisory group deVere offered his two cents and mentioned:
Printing of historic sums of helicopter money that’s pushed into the financial system has devalued the dollar and prompted inflation fears. You can’t just print bitcoin. As uncertainty heightens, investors will pile into safe-haven assets, particularly those not tied to any specific country such as bitcoin and gold.
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