Bitcoin‘s, a decentralized digital currency and there’s lots of people over the last two or three years, they’ve been talking about it as an inflation hedge, and so the big question is bitcoin an inflation hedge. Well before we answer that question, the first thing we have to understand is how investors actually react to inflation markets, they’re, forward-looking people, don’t wait around for inflation to actually occur before they move their capital. If i’m an investor in the market – and i think that inflation is coming, i’m going to go ahead and move my money to be prepared for that. High inflation environment and that’s exactly what we saw happen in 2020. Plenty of investors were worried about high inflation and they went ahead and they started to move capital into an asset like bitcoin that led to an absolute explosion in the price of the digital currency.
And so today, michael saylor, the ceo of microstrategy. He had a great tweet where he pointed out exactly what’s happened since then. He said: bitcoin is the best hedge against inflation, since microstrategy announced its first bitcoin purchase in august 11th of 2020. Bitcoin has appreciated 149 percent outperforming silver, which is down 17 percent gold, which is down 9, the nasdaq, which is up 5 s, p up 18 cpi at 11.2, m2 at 19.
U.S homes at 28 and ppi at 33, there’s plenty of folks who are saying: wait a second inflation’s at 8.3 percent. Why is bitcoin falling? But it’s because investors, who predicted that inflation was coming, they already moved their capital they’ve been prepared for this situation and if they were one of those people who foresaw this problem and moved capital before inflation hit, they’ve actually been a huge beneficiary buying bitcoin in preparation For inflation as an inflation, hedge was one of the best decisions you could have made back in 2020.
That doesn’t help people who are in the market today, but, of course, markets are forward-looking. Going and waiting until high inflation is here, usually isn’t a good strategy. If you then want to buy the inflation hedge asset, understanding markets, understanding assets, it’s all part of the game and bitcoin continues to prove that it is the best inflation hedge asset that exists.
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