{"id":"62cf049dccf2cc095ae0779c","cmsLocaleId":null,"lastPublished":"2024-06-07T20:47:26.750Z","lastUpdated":"2023-12-26T17:08:34.156Z","createdOn":"2022-06-15T14:56:58.887Z","isArchived":false,"isDraft":false,"fieldData":{"featured-recipe":false,"layouts":"be6b10efe6901af1e961a83d3ce9750e","excerpt":"“If bitcoin is such a great inflation hedge, why has the price not responded to record high inflation?” Let us explain.","ingredients":"<p><em>“If bitcoin is such a great inflation hedge, why has the price not responded to record high inflation?”</em></p><p><strong>Good question. </strong></p><p>Let's begin here: <em>Bitcoin offers </em><strong><em>long term</em></strong><em> protection against inflation.</em></p><p>While bitcoin has proven to be an incredibly effective hedge against dollar debasement over long periods of time, we shouldn't expect to see the price respond immediately to a high CPI print.</p><h2>Here's Why</h2><p>High inflation data signals to the market that the Federal Reserve is more likely to raise interest rates. A rate hike would make dollars more valuable in the near future – that's the point. So, investors who expect this to happen sell assets that are deemed risky and carry more cash. <strong>This is a rational short term response.</strong></p><p>While we know bitcoin is far superior to any other form of money, it is still a new asset. That's why investors consider it higher risk, and why it's still correlated with legacy risk assets. </p><p>As bitcoin matures, <strong>volatility in its purchasing power will subside</strong> and it will begin to decouple from the rest of the market.</p><h2>Value investing with bitcoin</h2><p>Most importantly, bitcoin outperforms most other asset classes in periods of low volatility. It is during these periods when bitcoin's value as a long-term hedge against dollar debasement (i.e., inflation) comes into play. </p><p>Over its history, assuming a longer time period, bitcoin has offered strong protection against inflation. As dollars become more abundant, bitcoin becomes more scarce. This is because bitcoin's supply cannot respond to increased demand.</p><h2>What you can do<br></h2><blockquote>Be fearful when others are greedy and greedy only when others are fearful   – Warren Buffet</blockquote><p>To understand the inherent value of bitcoin, it's a mistake to focus on price. Instead, look at its fundamentals, such as its <em>extraordinarily</em> stable monetary policy, the growth rate of full nodes, and the network's hash rate. All of these are stronger than ever.</p><p>Focusing on the right things helps you block out the noise. While fiat investors allow themselves to be distracted by irrelevant data, those who <em>get bitcoin</em> move in and capitalize on its low price. </p><p>Taking advantage of temporary dips is a profitable strategy. There are many ways to buy bitcoin, but our way is the best – we designed it to be as fast, easy, and inexpensive as possible. So <a href=\"https://coinbits.app/\">head to Coinbits</a> and grab some sats while the sale is on!</p>","name":"This is what everyone misses about bitcoin and inflation","slug":"this-is-what-everyone-misses-about-bitcoin-and-inflation","main-image":{"fileId":"62cf049dccf2ccc764e077d7","url":"https://uploads-ssl.webflow.com/62388b098fb64da19337d832/62a9f33a3612e056e386a92d_photo-1598398386929-4d5370672e9f.jpeg","alt":null},"tags-2":["62cf049dccf2ccb564e07774"],"selected-date":"2022-02-25T00:56:09.000Z","author-v2":"62cf049dccf2ccf8aae0778f"}}