Crypto supporters argue that unlike the dollar or any other traditional currency, a digital coin is designed to have a limited supply, so it cannot be devalued by a government or central bank that would distribute too much of it.
At a time when most central banks in the world are “printing” fresh money and “pumping” it into the system to provide the necessary liquidity due to the crisis caused by the Covid-19 pandemic, it is expected that more money will lead to a decline in its relative value.
Inflation in the United States reached its highest value in the last three decades in October.
An increase in prices was recorded for both basic foodstuff and luxury goods.
The reason for this situation, in addition to “pumping” money, can be a constant lack of supply and high demand.
The US Secretariat of Labor announced that the October consumer price index, which measures how much consumers pay for goods and services, increased by 6.2% compared to last year.
It was the fastest 12-month growth since 1990 and the fifth month in a row with inflation above 5%.
This would mean that if inflation of 6.2% remained at the same level for 10 years, the current $ 100,000 would become $54,800.
This situation spreads concerns and burdens investors, forcing them to look for ways to preserve the value of their money.
The traditional way to protect against inflation is to invest in gold, but other ways have emerged in modern business conditions.
Cryptocurrencies are considered to be one of the most popular, with Bitcoin leading the way.
Bitcoin as a custodian of value
Cryptocurrency owners are in a unique position and benefit from these latest developments or at least gain refuge from them.
Namely, the decline in the value of fiat currencies, such as the dollar, has highlighted the dominance of Bitcoin and other altcoins when it comes to hedging against inflation.
Bitcoin has broken another record and is on the verge of reaching $69,000 for the first time after inflation data prompted arguments about Bitcoin as a custodian of value.
The largest cryptocurrency by market value rose as much as 1.9% to $ 68,991 last Wednesday, surpassing the previous high set at the beginning of the week in New York.
According to Bitcoin Stimulus, Americans who invested their $ 1,200 checks in April 2020 as part of a state support program in Bitcoin now have a BTC worth $12,172, an increase of 914%.
Crypto supporters claim that unlike the dollar or any other traditional currency, a digital coin is designed to have a limited supply, so it cannot be devalued by the government or the central bank that would distribute too much of it.
That is why Bitcoin and other cryptocurrencies can be good custodians of the value of money and a safe haven for all investors and traders.