Crypto billionaire and founder of
Two billionaires propose crypto to fight inflation
In a tweet, the crypto billionaire asserted that inflation was an unassailable opponent to contend with. However, one did not have to fight against inflation when there is crypto to be had.
You can’t beat inflation. But you won’t have to fight it when you only have crypto. CZ said.
The assertion attracted the attention of the founder of MicroStrategy – the biggest institutional investor in Bitcoin, Michael Saylor. Saylor stated that one only had to ride on Bitcoin to remain unaffected by inflation
Set your Bitcoin sail and let the winds of inflation carry you, Michael Saylor commented.
The two crypto billionaire’s discourse has been warranted by the recently published inflation statistics in the U.S. According to data from the Bureau of Labor Statistics, inflation in the US for December reached a 39-year high. The data showed that year over year, prices of consumer items climbed 7% in December. The surge was primarily driven by an increased cost of energy, housing, used cars, and food.
The 7% increase marks the fastest YoY increase of US inflation since 1982. December, while being a new high in recent inflation, is not the only month that has printed alarming inflation figures. Inflation rate exceeded 5% for 8 consecutive months last year, and according to projections may continue to rise in 2022.
The Federal Reserve has been responding to the increasing inflation rate, although it only recently stopped describing the situation as transitory. In a recent appearance before Congress, Fed chair Jerome Powell stated that the central bank would raise interest rates to combat inflation. Powell warned that the Fed may carry out up to three interest rate hikes in 2022 if it saw the need.
If we see inflation persisting at high levels longer than expected [and] we have to raise interest rates more over time, we will, Powell said.
The Fed first revealed its plans to raise interest rates in the minutes of a meeting it held in December. The document caused some turmoil in the crypto market and has been cited as one of the reasons for the recent crypto market crash. Since the minutes of the meeting was released, Bitcoin has fallen from $46,000 levels to currently trading around $43,000.
Is Bitcoin a reliable inflation hedge?
The Bitcoin price volatility that accompanied the Fed announcement has made some observers in the traditional market question if Bitcoin is a reliable inflation hedge.
However, Bitcoin proponents such as Michael Saylor, Bill Miller, and Ray Dalio, do not doubt the store of value properties of Bitcoin as they have shown in their investment strategies. Despite short-term volatility, Bitcoin has performed impressively over the long term. This is why more institutional investors, high net worth individuals, and even retail traders have been showing an increased preference for Bitcoin over fiat currencies.