Bitcoin’s recent plunge is failing to prove its capability to serve as an inflation hedge as marketed by its advocates, WSJ reported.
- The Bitcoin selloff has recorded a steep decline after falling five days out of the last week and is down 7.9% for the month. It has already lost around half of its value since its record-high $60,000 in April.
- Inflation accelerated to a 13-year high of 5.4% in June, with 49 countries recorded an uptrend on consumer prices since the start of 2021, as economies start to reopen after the COVID-19 lockdowns.
- Analysts say the latest swings appear to be detached from macroeconomic fundamentals such as inflation, and investors are unlikely to increase their Bitcoin holdings as a hedge to inflation.
- A significant proportion of investors believe Bitcoin’s price is still largely driven by speculation, as they increase their holdings in the belief that they can sell at a profit later.
Analysts also believe there is not enough data to come up with a definitive conclusion between Bitcoin and inflation.
BTC is up 1.97%.