Topic: Does inflation affects bitcoin? (Read 212 times)

The answer we have been experiencing since last year. that is, when high inflation hit almost all countries, see at that time what effect it had on bitcoin. I myself see that high inflation in a country actually makes citizens in that country look for alternatives to save the value of their assets and transfer them to other things. and other things that include bitcoin. when fiat was the most affected. then moving it to bitcoin is good enough. So indirectly Inflation does have an impact on bitcoin. either positive or negative. Even when the market sentiment heard the announcement that the inflation rate in America was decreasing, we can see that the bitcoin price had strengthened.

Inflation affects every asset and everybody. When the price of a loaf of bread rises, your food costs rise. When you pay more for your food, you will have less money to invest. If you have less money to invest, you buy less bitcoins. If you buy less bitcoins, bitcoin's price goes down. You can replace bitcoin with any other financial asset.

The only way to break this chain is getting a raise from your employer but let's be honest now... Not everybody can do that. Most people will just accept their loss to the inflation and won't try to get a raise or find a different job.

That's because a low paying job is better than having no job and the employers know that very fucking well.

Last time we had a huge inflation (pandemic period) the price went up. Because governments printed money out of nothing and that meant that money would have a lesser value, what you could buy with X amount wasn't the same anymore. This means that inflation does impact bitcoin, but of course inflation also has a respond to it, which is recession with high interest rates, which also drops bitcoin as well.

Most things that makes bitcoin go up, also makes stocks go up, and same for when both of them goes down. Which means that you can check what makes stocks go up or down, and since that has been around for decades that means you could do so a lot easier.

Are you sure bitcoin is another asset, not controlled by anyone? Bitcoin market is a speculative market manipulated by people with money. What is happening in the market depends not on supply and demand but on the manipulation of the tycoons, even if ordered by the government themselves. Don't be too naive, this is a money laundering market, nothing more, nothing less.

Yes, inflation can affect the value of Bitcoin in a number of ways.
Firstly, inflation can reduce the purchasing power of fiat currencies, making people more likely to invest in alternative assets like Bitcoin. As the supply of fiat currencies increases, their value tends to decrease relative to other assets, including Bitcoin.
Secondly, inflation can increase the supply of Bitcoin. Bitcoin has a fixed supply of 21 million coins, but new coins are created as part of the mining process. Inflation reduces the value of each individual Bitcoin by diluting the supply.
Finally, inflation can impact the overall economy, which can in turn affect the demand for Bitcoin. High inflation rates can cause economic instability and uncertainty, which can drive investors towards alternative assets like Bitcoin as a store of value. Conversely, low inflation rates can indicate a stable economy, which may reduce the demand for alternative assets like Bitcoin.

I since I was in my home country and things in terms of inflation and how it is now bitcoin can also save many people from the precarious situation of many and if everyone reads this thread I'm sure they will to change opinions about bitcoin, it is very difficult to change consciences, but I know that whoever has bitcoin will never suffer the ravages of inflation, whoever has bitcoin will be king. Those who are anti-bitcoin say that it can drop a lot in price and that can bring losses, but if it goes up? Where are they going to take the profits? I'm sure beyond the clouds.

Inflation has an impact on all aspects of the economy and finance, including bitcoin. Interest in buying bitcoin during inflation depends on how financially strong you are where when you don't have a good job with adequate income, it will be difficult for you to save for investment. While on the other hand, inflation has allowed them and companies to make bitcoin a good store of value asset instead of fiat, that is because fiat continues to lose value during inflation.

In general, the impact that occurs on the bitcoin market during inflation is almost the same as what happens to other investment assets, but bitcoin is a different case compared to other assets because it is not controlled by the government and anyone at all.

Actually there are lots of factor that affect the price of Bitcoin   Inflation is not the only one that affects the Bitcoin market.  More or less it is the adoption that dictates the price of Bitcoin.  Since there are several factors, the effect of inflation can be countered by other factors.  So I think inflation even as one of the factor that affects Bitcoin, there are other factors that give more impact on Bitcoin market.

I think you are mistaken here, inflation in a lame mans explanation could be described as the government printing too many cash, thereby causing a lot of cash to be in circulation.
you should under the law which states that the more something is scarce, the more it is valued, so when we have too much cash in circulation, it causes the value of the money to drop and this is when the price of things goes up, so to make it more simple, we can say that high inflation is what gives birth to high cost of things, not the other way round.

Normally, high inflation is supposed to affect bitcoin positively, since high inflation will drive people to put their money in bitcoin so as to preserve its value and possibly increase the value later on, but the problem is this, this opportunity seems to be only available to the rich and maybe some middle class persons, those that are poor will have to live with whatever they have and can get, since they can not afford the means of investing in bitcoin.

Yes, inflation can affect Bitcoin. Inflation refers to an increase in the general price level of an economy and is usually associated with an increase in the money supply. Therefore, high inflation rates can cause currencies to depreciate in value and increase the prices of goods and services.

As Bitcoin is a decentralized digital asset, it is not controlled by any central government or financial institution and its money supply is limited. Bitcoin can therefore provide a hedge against inflation.

However, in countries where price levels are high, people may have less capital to invest in Bitcoin, which could affect demand in the Bitcoin market.

In short, anything that affects human life can affect the price of bitcoin, because even though bitcoin appears to be a decentralized currency, the center of bitcoin is all the people who use it and their capital.

Inflation can definitely have an impact on the price of Bitcoin, as it affects the purchasing power of people's fiat currency. When inflation is high, people may be less willing to hold onto their fiat currency and may seek alternative stores of value such as Bitcoin. However, this is just one of many factors that can influence the price of Bitcoin, and it's important to consider other factors as well, such as market demand, adoption, and regulatory developments.

Ultimately, Bitcoin's value is determined by supply and demand in the market, and it is constantly evolving as the technology and ecosystem mature. It will be interesting to see how the relationship between inflation and Bitcoin develops over time as more countries adopt cashless policies and as the use cases for Bitcoin continue to expand.

So far we have seen how the price of bitcoin fell when the FED plan announced an increase in interest rates when inflation occurred, from that we can actually conclude that bitcoin is still very influential on inflation and I think many of us are aware that there is actually an attachment between fiat currency and bitcoin is still very large, besides inflation, so far there have been many things that have really influenced the price of bitcoin, but the most important thing is, of course, the supply and demand factors that form the basis of bitcoin price movements in the market.

therefore indirectly inflation affects bitcoin, even though bitcoin aims to tackle inflation. but currently fiat currency is still the main value from all aspects, even though many countries suggest reducing the use of cash, but the value of bitcoin is very volatile and of course political interests that have not been able to make it a legal currency even though only as an alternative payment for now

It is said that bitcoin is not affected by inflation, that infact bitcoin was created to hedge inflation. In some aspects the theory is correct but in some aspects the theory is faulty. This is because money used in investing into bitcoin is not from vacuum. When the economy is bleeding, people will no longer invest in bitcoin and people who already invested will start making withdrawals to sustain themselves in the harsh period, from there bitcoin will respond to the inflation.

The traditional markets have got related with the cryptocurrency Market. This makes both the markets to have mutual dependence and for that reason I'm sure inflation will have its impact over the bitcoin. Based on the feature bitcoin holds it is supposed to function against the inflation. In reality the usage varies and the same makes it coexist and impacted.

Indirectly, yes. Inflation would be felt across countries which would affect how an individual will mke use of his or her funds. If an average employee would suffer from the increase with the daily expenses to live, then how come would he still be able to engage with investments? Therefore demand would be low perhaps in this industry as an example of investment. Why would it be that bad? Most of the people across the globe especially on third world countries are minimum wage earners which makes them the first ones to be affected by any economic problem. This is how I view the situation as having an indirect effect in this industry. Lower demand simply means lower market value.

Right and that's why those that think that bitcoin's price is getting any lower in the future, think of how inflation will affect bitcoin's price. So as things mostly go up and the value of fiat gets lower, there will be more fiat that's needed for every purchase that we'll do in the future.
And the same goes for bitcoin, it has got only one way in the future and that's to go up based on factors that we know like inflation, halving, mass adoption and other more.

Inflation globally makes everything become more expensive but it is not what we want. If our salary won't increase at a same or higher rate than inflation rate, we are losers.

The global inflation and recession will give people more reasons to plan their lives better financially. For people who have good income and savings in banks or stocks, they will find other assets to get better ROI for their investments. Stocks were boosted a lot by QEs from many big countries but they started to burst recent months.

When millionaires and billionaires look for other opportunities, they would like to find more risky assets like Bitcoin and cryptocurrencies. They will feel more impressive and convincing that since 2009, Bitcoin is a safest asset and best one for investment. Millionaires and billionaires don't bet with their big capitals without DYOR exercises so after they did such and felt impressive, they will spend big capital into this.

ROI charts for 5 years and 10 years don't lie us.
https://casebitcoin.com/charts#roi_chart

I believe in next 10 years, very huge capital flow will be poured into blockchain, Bitcoin and cryptocurrencies.

According to fideily Investment, the inflation have an effect to bitcoin
"As inflation rises, the U.S. Federal Reserve (the Fed) and other major central banks may be inclined to continue to raise interest rates or tighten monetary policies to slow the price rises. As a result, many asset classes, including cryptocurrencies, may see their prices fall." - https://www.fidelity.ca/en/investor/investorinsights/digital-assets/what-rising-inflation-means-for-bitcoin/

In short term And also I notice it when I do trade maybe some member here will notice it too when the FED tend to increase the interest rate the market will shake and crypto market usually fall down and it happen not just to crypto market but also to other investment instruments.

In long term you can notice that price of bitcoin it against the inflation the US dollar lose its value over time but the bitcoin like gold that increase the price over time

With what happens in 2022, it can be seen that speculative assets are all affected by inflation, and bitcoin is no exception. It can be said that in the short term, bitcoin is still affected by inflation, but in the long term, I think inflation does not affect bitcoin. If you hold bitcoin from 2014 or 2017 to the present, even though the value of bitcoin has dropped 80% since ATH, it is still at a high growth compared to the price from 2014 or 2017. That shows bitcoin has beaten inflation in the long run. If you invest in bitcoin now, it will not save you from ongoing inflation, but it will certainly help you avoid another round of inflation in the future.

I'm not sure if there is really a significant effect of cashless policy over the rising prices of goods and services. On the contrary, it is even possible that a cashless policy would somehow limit the people's spending to the point that the demand on goods and services is significantly reduced, thereby causing the price to fall. Imagine how much money that should have circulated if bank withdrawals in some countries were not reduced to a very low minimum.

Inflation doesn't have a single effect on Bitcoin. On the one hand, somebody who is severely affected by the rising prices of goods and services could let go of his/her Bitcoin savings. But on the other, in a country where inflation is high and fast, saving in Bitcoin is a perfect choice.  

I was also curious about this, remember last year or a few months ago, the inflation rate for most of the countries in the world experience a pump on inflation rate.
So for me, I was expecting also that Bitcoin is the solution for this, if you are afraid to lose the value of your fiat currency, put it on Bitcoin, but as you can see also we saw some dumps during that time and now seems we are recovering.
So for me, there's some part that Bitcoin is affected by the inflation rate.

Bitcoin is so volatile that it's impossible to say whether it was affected by inflation or not. We have the market data from 2021-2022 which shows that Bitcoin didn't react to inflation. So it's not a traditional hedge against inflation like gold right now. But maybe if not for inflation and the narrative of Bitcoin being digital gold, it wouldn't have gotten to the level we have today.

with inflation in this world, of course it will affect the price of bitcoin. but with the fall in the price of bitcoin, of course, it provides a good opportunity for those interested in buying bitcoin, because bitcoin is a valuable asset and the number is only 21000000, so with inflation, the price of bitcoin must have fallen and we shouldn't waste this good opportunity to buy bitcoin.

So don't be afraid of inflation.

Inflation will effect everything surrounding fiat. Bitcoin is no exception here, but the price is quite right to buy bitcoin now and hold them. Because as we can see clearly inflation is not going to stop anytime soon. The price of everything will go high and nothing can hold them down.
The higher the price of everything goes the lower the value of fiat will be, so if you want to buy bitcoin now you have to pay higher price against US dollars. Not everyone here is from USA so the exchange rate of USD is taking a part here.

In this case, of course, everyone has different opinions, but everyone also has reasons. if I think the answer is, yes,, that bitcoin will definitely be affected by the collapse of the world economy, or inflation.
but I think even if the price of bitcoin goes down, the decline won't be much either. so it's just a slight drop.
because bitcoin is unique, the more the price goes down the more people buy it. that's why many say that investing in bitcoin is safe.

It does indeed as long as it has to do with finance. The stock market too. As long as prices are affected, Bitcoin prices at certain seasons will be affected.
Although, Its adoption has helped cut down expensive lifestyle for those who had long been seeking better ways of diversifying funds rather than blow it all away on luxurious or pleasurable lifestyle.
If one isn't earning in Bitcoin,  the best way to not be left out is to invest in buying some and HODL. The scarcity of funds for you will inculcate the discipline to be patient while planning towards the future.

There's this thing called inflation death spiral. When inflation remains at 2-3% people don't notice it. Goods and services don't visibly go up in price every month and people spend money when they need to. Situation changes when inflation hits double digits, at which point prices can go up month to month and you see it. That makes people spend more money to get rid of it, more spending means more loss of value for the currency and more inflation.

Such event, like the ones in Venezuela, Turkey, Zimbabwe, make people dump currency for a better store of value and that includes bitcoin, so the price is and will be affected positively by inflation. On the other hand countries try to slow this selling of currency by adjusting interest rates and this can make some investors (mainly those who are now in debt, or who invested on credit) sell their bitcoin. This is a temporary situation though because in all possible scenarios bitcoin pumps in the end.

Scenario 1: FED keeps increasing rates and crashing the markets. Traditional markets will dump and take bitcoin for a ride, but stocks can go much lower than bitcoin. Eventually people will start switching to hard assets like bitcoin and gold and make bitcoin decouple from stocks.

Scenario 2: FED gets scared of crashing the markets and pivots. They'll go back to printing and realize that their target inflation levels are unachievable. Everything goes back up, bitcoin pumps for speculative reasons.

Scenario 3: We get an inflation death spiral that leads to hyperinflation and a monetary collapse. Again people will turn into hard assets, bitcoin goes up.

Scenario 4: people get scared of FED rates, stop taking loans, stop spending, inflation goes down, FED keeps the rates at current level to stabilize the markets. Bitcoin will remain stable and pumps after the next halving as difficulty rises.

Inflation affects markets in general — may it be investment assets like stocks/crypto or assets in general, commodities, liabilities, you name it. Do some quick research on how markets in general reacted to the approximate 8% inflation of the USD.

Inflation induced by reckless spending doesn't directly control Bitcoin stability. But generally speaking, Bitcoin could provide some level of relief for inflation because it isn't inherently designed to reduce purchasing power.

Keep in mind, a consumer who only holds Bitcoin is going to be affected by inflation the same way someone with fiat would be if the inflation isn't induced via money printing but rather consumer goods increasing in price collectively due to external circumstances (ie a war). But with fiat, once new dollars are printed, it becomes difficult to remove them from circulation so your purchasing power will go down proportional to the amount of new dollars introduced.

depends if you are a smart investor or not

when the words "inflation" started being shouted in late 2020-late 2022 due to all the financial fiddlings of covid cheques and ukrainian-russian war causes of fuel cut-offs and market manipulations

alot of smart people knew that inflation meant their FIAT would buy less goods in the future, so they would buy supplies and products quickly to stockpile for a year+, before the prices would ultimately rise

this meant they then had their ongoing income not required to buy things regularly due to stockpiling goods. and so free to invest...
this meant they would then invest it in inflation beating assets

which meant buying crypto/gold/ etc

also with electric prices going up meaning mining costs going up. this then means less people selling coin at previous bottomline costs because bottom line costs have gone up

but here is the thing
th results i just explained of inflation.. have yet to move in
mining farms buy electric supply in 1-2year lump contracts meaning they are still priced in at the 2021-2022 rates and yet to feel the 2022-23 rates hit them

alot of businesses stockpiling materials in early 2022 have yet to sell the goods they produce using those stockpiled cheaper produce. so yet to profit from that planning. and so yet to get ongoing income/profit .

but it will happen

If we think about the price of Bitcoin, inflation will just affect fiat money and Bitcoin is far in reach for it.
But if we talk about the demand for Bitcoin investment. Of course, people will think now that the use of Bitcoin is somewhat a good way to escape from inflation but the question is if it is acceptable in our country and stores as we know that only a few had adopted it for now. It means that we still need to convert our Bitcoin to fiat in order to use it. Meaning we are still hit back by inflations.

I don't see the connection between having high price goods and consumables with bitcoin's price. Bitcoin is a deflationary asset and the more the price of these goods is being ticked in by inflation then that means that bitcoin's going to be higher than theirs.
Regardless of the situation of an individual, whatever the price will be for bitcoin, they'll allocate funds to it to buy or trade it as much as they want. Then the obvious is for those that have no capital, there's really no way for them to buy anything.

Bitcoin is the perfect inflation cheat device but you have to be willing to hold long term. The financial situation, worldwide is a mess right now.

If we go into a deep worldwide recession then everything will nosedive, most probably bitcoin too. This just provides us with great opportunity to add to our stack though.

You will make extremely handsome profits if you buy bitcoin now.

Theoretically a cashless society or policy does not affect the price of things. It is simply a means of accepting payment through other channels besides collecting actual cash.

Inflation, which is a drop in the purchasing power of fiat currencies, meaning more money is needed to make purchases does affect every asset, Bitcoin included.

Inflation exposes the frailties of fiat currencies, pushing people to an inflation resistant asset like bitcoin and thus driving the value up.

- Jay -

The idea that fiat currency is going to be inflated away to being of no value is what makes a lot of people pick up a stack of BTC just in case.  I think we're still in the growth phase of BTC, but at some point when it's penetrated enough markets, it's value will be driven not by it's growth, but by the decline of fiat currencies.  It's hard for people in developed nations to really comprehend inflation above 100%.  Watching your savings disappear as banks won't let you access it anyway.  It's a nightmare that most people don't think it really possible for them.  Maybe it will seem more possible in the coming years as governments struggle with recession and war while Bitcoin becomes more scarce (and hopefully with more use cases). 

I believe inflation can indeed affect the price of Bitcoin, because what you have mentioned on the demand decrease for satoshis when people cannot afford to trade or hold.

However, I believe these situations are not a threat whatsoever for the future growth of the Marketcap, one of the reasons is the deflationary nature of Bitcoin itself. Just my opinion, of course. Always DYOR.

Many nations at point of time are going through cashless policy and this policy affects price of things in different market regions of the world.

Can inflation which is the high demand of price over few goods or products actually controls the stability of bitcoin pumping or going down?

Because I believed where people are facing high price over fewer goods makes it difficult for people to trade bitcoin with little or no capital! So can inflation makes the market cap of bitcoin not having a reality face of surviving?