Are Bitcoin’s record prices sign that inflation is not going away anytime soon
The coronavirus pandemic and resultant economic shutdown have led to worries of inflation spurring up around the world. However, it has also led to a rise in the adoption and acceptance of Bitcoin. Many believe Bitcoin is a superior hedge against inflation when compared with traditional assets like gold.
With inflation levels and bitcoin prices rising in almost tandem, some have begun to notice a connection between the two. Peter Thiel, who is a Bitcoin maximalist and CEO of payments giant Paypal, recently suggested that Bitcoin’s record prices might be indicating that the current inflation might last for a long time.
According to a Bloomberg report, the billionaire opined that several cryptocurrencies, including Bitcoin, recently reaching new record highs proves that inflation is real and here to stay. He had also recently complained that more appropriate measures for consumer protection should have been taken by the US Federal Reserve, who instead downplayed the situation.
Change in opinion
These comments come in sharp contrast to what the CEO had stated earlier in April when he had shared his thoughts on Bitcoin being a “Chinese financial weapon against the U.S.” that was threatening fiat money and the American dollar.
Nevertheless, Thiel’s comments remain valid at a time when annual inflation in the US rose at its fastest pace in more than 30 years during September. This was also accompanied by a decline in personal income, according to government reports.
Recently, strategists from top banking institution JP Morgan had claimed that Bitcoin’s renewed price rally was being driven by increasing inflation concerns, rather than the release of its first Futures ETF, as many had previously believed.
However, not everyone is entirely convinced of Bitcoin’s hedging capabilities. Hedge-fund mogul John Paulson, who had famously profited off shorting the 2007 housing crisis, has sounded repeated alarms about the industry being in a bubble with Bitcoin being on the brink of collapse.
Thiel had recently revealed his FOMO of being “under-invested” in Bitcoin and that now the “secret is out.” In his recent interview, he again expressed his belief that Bitcoin’s current price levels did not necessarily constitute a buy. He said,
“You know, $60,000 Bitcoin, I’m not sure that one should aggressively buy,” he said. “But surely what it is telling us is that we are having a crisis moment.”
The top cryptocurrency was changing hands at $61,896 at the time of writing, having gained a 2% price valuation over the past day.