If inflation is rising, why isn't crypto more valuable now?

Abiky

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Quote from: kryptqnick on May 29, 2022, 07:46:26 AM

I think that Bitcoin has been doing well during the pandemic and the beginning of the war. In May, however, it hasn't been well. I guess it's because things aren't so simple, and in difficult times people don't always have money to invest and put their trust in something that isn't state-controlled. What we're seeing now is also a short-term negative movement, it might not reflect what will happen to Bitcoin's price in the future. When the pandemic started, the effect on Bitcoin was devastating. But it recovered eventually. Perhaps, even 3 months after the 2022 invasion, the war is still in its early stage, and maybe Bitcoin will rise later.

The recent crypto crash is largely attributed to the Terra/LUNA collapse. Before that, crypto was doing good even with the pandemic and the Russia-Ukraine war in play. For the market to recover, we're going to have to wait quite some time until investors' confidence is restored. Hype usually comes after each Bitcoin halving, so my guess is that crypto prices will rebound sometime during 2024. Fiat inflation rates are on the rise, so it should only be a matter of time before scarce commodities/assets like Bitcoin and Gold go all the way to the moon. Who knows if buying crypto now will lead you towards untold riches in the future? Just my thoughts Grin

worle1bm

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For people it's too risky and there are scams in this market which is right also an they prefer other inflation hedge like investing in some real estate and stock market to make some profits in future but they are ignoring the fact that it's also related to inflation and rates over the World are increasing at rapid pace.So you need to make some good investment like in Bitcoin for long term that is not going to be depreciated fast compared to fiat.

bitcub

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Yes indeed the inflation is rising and people are looking for good ways to peg the value of their money. Lets wait for crypto to reach the dip before it goes up. People are also pegging their money in GOLD or OIL.

KingsDen

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Quote from: kryptqnick on May 29, 2022, 07:46:26 AM

I think that Bitcoin has been doing well during the pandemic and the beginning of the war. In May, however, it hasn't been well. I guess it's because things aren't so simple, and in difficult times people don't always have money to invest and put their trust in something that isn't state-controlled. What we're seeing now is also a short-term negative movement, it might not reflect what will happen to Bitcoin's price in the future. When the pandemic started, the effect on Bitcoin was devastating. But it recovered eventually. Perhaps, even 3 months after the 2022 invasion, the war is still in its early stage, and maybe Bitcoin will rise later.

Bitcoin has ways to relate to its environment. Whatever is happening to our immediate environment will find a way to fall back to Bitcoin. If there is pandemic, whether war or inflation, Bitcoin gets its own share of it. This is the reason fundamental analysis exists. When there is global threat of war or hunger which instigates uncertainty, people tends to withdraw from wherever they invest in order to sustain and survive the situation. While this last, the price of Bitcoin gets affected. Though this cannot be said if it's an internal crisis, because any internal crisis may simply make citizens to try push their money to Bitcoin for safety.

kryptqnick

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I think that Bitcoin has been doing well during the pandemic and the beginning of the war. In May, however, it hasn't been well. I guess it's because things aren't so simple, and in difficult times people don't always have money to invest and put their trust in something that isn't state-controlled. What we're seeing now is also a short-term negative movement, it might not reflect what will happen to Bitcoin's price in the future. When the pandemic started, the effect on Bitcoin was devastating. But it recovered eventually. Perhaps, even 3 months after the 2022 invasion, the war is still in its early stage, and maybe Bitcoin will rise later.

Despairo

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Quote from: Sir Legend on May 26, 2022, 01:23:52 AM

The world is currently facing a serious problem, namely inflation in many countries, the USA which is the world's strongest economy is also experiencing inflation so that many subsidies are reduced, of course this is a global problem that will continue to occur so that many people sell anything including crypto to make ends meet.

Inflation doesn't only happen in many countries, but any countries that use fiat as their legal tender will faced inflation, it means the whole world always have an inflation. It doesn't make sense they sold their Bitcoin to fiat, since it just decrease the value due to inflation. The reason why they sold their Bitcoin is because the market on bear season and they're looking for more low risk investment assets.

Abiky

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Quote from: Smartprofit on May 26, 2022, 02:01:11 AM

There is an inverse relationship between the increase in US Fed discount rates (refinancing rates) and the price of bitcoin (expressed in USD).

The US Federal Reserve's discount rate is the rate at which the US Federal Reserve lends new money to commercial banks. Commercial banks (in turn) lend dollars to other organizations and individuals. Thus, the Fed's rate hike. leads to an increase in the value of the US dollar (and a fall in the price of Bitcoin).

At present, a further increase in rates by the US Federal Reserve has been announced.

Therefore, we do not observe an increase in the price of Bitcoin and other cryptocurrencies.

It seems this is what's preventing Bitcoin and other cryptocurrencies from reaching new All-time-highs in price. The LUNA collapse also has something to do with this. Long-term speaking, crypto should be more valuable as mainstream adoption grows like crazy. There are some governments already embracing Bitcoin as legal tender, so crypto is here to stay. With every block reward halving, Bitcoin will become scarcer than ever. Since altcoins follow Bitcoin's footsteps, any positive reaction on Bitcoin's price will mirror itself on these other coins too.

Ultimately, what matters is utility. As long as crypto is useful, nothing else matters. Just my opinion

TheGreatPython

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Quote from: Zilon on May 20, 2022, 09:37:27 AM

Asking a general question on why crypto isn't rising amid the inflation on major fiat currencies hope you know most crypto are shit coin. It will be more better if you narrowed your sampling method on Bitcoin alone at least that way you can evaluate with good statistical proof how much Bitcoin has grown in the past 4 years.Not to mention how Bitcoin grew from $1 to $68k in a space of 14 years. Gold and other valuables has been since time memorial with steady centralized price manipulation yet Bitcoin still stands above $30k. Diversified portfolio could be the only way to satisfy your quest

Majority of those that would ask such question are just those who are coming in newly into the market and are expecting to get rich quick. Someone who has been here for years and seen the price of bitcoin go from where it was back then to what it is now wouldn’t be here asking such a question.

I was here since 2014 and I saw how low the price of bitcoin was then and I always appreciate how far that it has gone, because even the today’s lowest of $20k price range is a big difference to what I saw then, and it did benefit a lot of us. It will still do in the future.

Smartprofit

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There is an inverse relationship between the increase in US Fed discount rates (refinancing rates) and the price of bitcoin (expressed in USD).

The US Federal Reserve's discount rate is the rate at which the US Federal Reserve lends new money to commercial banks. Commercial banks (in turn) lend dollars to other organizations and individuals. Thus, the Fed's rate hike. leads to an increase in the value of the US dollar (and a fall in the price of Bitcoin).

At present, a further increase in rates by the US Federal Reserve has been announced.

Therefore, we do not observe an increase in the price of Bitcoin and other cryptocurrencies.

Sir Legend

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The world is currently facing a serious problem, namely inflation in many countries, the USA which is the world's strongest economy is also experiencing inflation so that many subsidies are reduced, of course this is a global problem that will continue to occur so that many people sell anything including crypto to make ends meet.

Dunamisx

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Quote from: rahmatrf331 on May 22, 2022, 10:39:52 AM

In my opinion, one of the factors that inflation occurs is that all needs go up but the financial system does not support it at all as now the crypto market everywhere has started to decline, it is not worth it. inflation will continue to increase if the world market continues to experience a crisis so that the bear market will also be bearish.

you're somewhat right about the whole scenario, lets take a look at how fiat currency depreciate commodity items in value, we all believed that once there's inflation, the price does not go back to the initial rate for all commodity which is one of the affecting factors government refused to consider in tackling against the impact of inflation on the economy system, bitcoin is an entire different approach, when it goes volatile, the prize of commodity items does not change or increases but instead it is maintained, it's the price that moves under the demand and supply of bitcoin and people have the opportunity to make profits from such while the impact of fiat causes inflation to the economy.

Abiky

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Quote from: DrBeer on May 24, 2022, 06:56:30 AM

Why should they be more expensive? Is the crypt somehow connected with the world of real money, economy, trade? Why, for example, does the photo in your phone, or the view outside the window, not rise in price?

The crypt is now still an alternative reality. Therefore, processes in the real world and in the crypto world are weakly connected with each other. Yes, at times when the crypto was expensive and there was a trend for the price to rise, it entered into an alternative "haven" for the transfer of assets, in an unstable financial situation. Now the crisis is global, and the crypt does not have the status of a "money savior", especially after a 2-fold drop in its price, and ambiguous trends

If Bitcoin is often viewed by many as "Gold's successor", then prices should go up the more Fiat loses its purchasing power through inflation. But somehow, nothing's happening as prices continue to sink like there's no tomorrow. I guess cryptocurrencies need more time to mature before they become a true alternative against the existing monetary system.

Regardless of market prices, one can still use crypto directly for cross-border payments. But in a world where everything moves around Fiat, paying for thing directly using crypto regardless of its price makes no sense. Slowly but surely, countries are adopting crypto/Blockchain tech for their own benefit so it should only be a matter of time before we become the next crypto millionaires. I'm in no hurry to see this happen as long as crypto works as intended. Just my opinion

Joshapat

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If inflation occurs, many people need cash to pay for bills, debt and other necessities of life, inflation is certainly a problem that will continue to occur, but usually this is only temporary because people will think that crypto is the hope to increase income and reduce inflation.

DrBeer

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Quote from: Abiky on May 16, 2022, 07:04:43 AM

The US Dollar's inflation is on the rise as the pandemic coupled with the Russia-Ukraine crisis have damaged the global economy. Any negative effects on the US Dollar will surely affect other countries' economies, since it's the world's reserve currency. Considering that inflation has increased at a fast pace since the start of 2020, scarce assets/commodities like Gold and Bitcoin should've increased tenfold by now. Yet, Bitcoin is struggling to reach a new All-time-high in price while Gold's been unable to get past $1.9k. In the crypto market, Bitcoin is the one cryptocurrency that moves everything with it. So if Bitcoin goes down, so will the rest of the other coins being traded on the market.

My question is why isn't crypto rising in price if inflation on major Fiat currencies have soared like crazy? Am I missing something here? It's a shame since Bitcoin was long hailed to be a safe-haven asset like Gold. Your input will be greatly appreciated. Thank you.

Why should they be more expensive? Is the crypt somehow connected with the world of real money, economy, trade? Why, for example, does the photo in your phone, or the view outside the window, not rise in price?

The crypt is now still an alternative reality. Therefore, processes in the real world and in the crypto world are weakly connected with each other. Yes, at times when the crypto was expensive and there was a trend for the price to rise, it entered into an alternative "haven" for the transfer of assets, in an unstable financial situation. Now the crisis is global, and the crypt does not have the status of a "money savior", especially after a 2-fold drop in its price, and ambiguous trends

Abiky

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Quote from: tomahawk9 on May 19, 2022, 09:34:36 AM

we were led to believe bitcoin was the best "safe haven" in times of economical uncertainty (like the current US recession) and war that eventually hit the world economy (russia-ukraine) because the market was yet to experience something of that magnitude, in a way we were gullible (?) and it was easy for some people to convince others that btc was going to go to the moon during a financial crisis, so the grand majority of the market set high expectations around btc if such turbulent events were to occur. Now we're going through those terrible events and it's ugly and obviously we weren't prepared to the punch in the face (financial crisis and a btc crash). Maybe those things about "btc safe haven" were true before the big investment firms, bankers and wall street entered the crypto market, but that ship sailed a long time ago and the btc price now mirrors traditional markets which are currently on a downtrend and you can be sure (sadly) that btc will follow that trend

That sucks real bad because it ties Bitcoin to the existing financial system (something that it was meant to avoid in the first place). How can Bitcoin become an alternative to Fiat if its price moves in relation to the stock market? That's what happens when big players (wall street, institutional investors) are in play. In the early years of Bitcoin, things were a lot different than what they are right now. People used to believe in BTC as a currency, not as an investment or speculative instrument. But greed took over, so BTC's price will be subject to heavy manipulation by whales and the likes.

Let's see what'll happen within the next 2-3 years as the world's economic situation continues to deteriorate. The more countries adopt Bitcoin as legal tender, the higher the demand for the cryptocurrency will be. Hopefully, BTC will become much more valuable in the future with every block reward halving. Who knows if we become the next Bitcoin millionaires? Just my opinion

rahmatrf331

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In my opinion, one of the factors that inflation occurs is that all needs go up but the financial system does not support it at all as now the crypto market everywhere has started to decline, it is not worth it. inflation will continue to increase if the world market continues to experience a crisis so that the bear market will also be bearish.

freedomgo

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So I like to answer with a question, is it automatic that crypto will rise when inflation increases?

I think the main reason why bitcoin is rising is that people are investing, so how can people invest their money if they have financial difficulty due to inflation, maybe the whales can invest or people who own big companies just to keep their money safe from inflation. However, if we look at the overall impact, it's still the majority of the investors are moving the price of bitcoin and they are not as rich as company owners or Elon Musk for example.

davis196

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There are two types of inflation:
1.Demand inflation-when money printing machine goes brrr... and there are too many paper money circulating in the economy.
2.Cost inflation-when the prices of important commodities increase due to non-economical factors, like western sanctions over Russia, the war in Ukraine, the supply chains getting disrupted by the pandemic, the microchip deficit, etc...
We are witnessing a combination of the two types of inflation right now. The investors are selling risky assets and buying safe heaven assets like gold and real estate. Bitcoin(and crypto coins in general) simply isn't viewed as a safe heaven asset. In times of crisis and uncertainty,the investors are sticking to what they are familiar with.

speedy963

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It's still doing better than most long term investments though. A change in time frame while looking at your charts will be able to easily fix this worry of yours. Although, it only applies for long term investors and not the weak-handed people or to most of the leverage lovers specially those doing high levs. Not that I'm generalising or assuring anything but yes, this is the case most of the time.

Now, although mass adoption is happening faster than ever, the economic crap is messing thing outside of crypto a lot. Which means not a lot of people are eager to risk investing on crypto other than those that really understand this industry or the people that are really pro-crypto. While people are looking for better investments, people are also hesitant. Unless the whales themselves initiate a huge buy pressure, the smaller people won't have that much confidence to invest. At least that's how I currently see things in this industry.

jaberwock

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Quote from: Wind_FURY on May 18, 2022, 12:36:44 AM

You were here during 2014, before many of us. I would believe that you among most of the people would have already understood Bitcoin's open-market induced volatility.

Plus what you're saying about "cannot serve as an alternative to the legacy financial system" is debatable. Bitcoin functions as well during bull markets, and bear markets, producing block after block without downtime. The Dark Markets continue, Bitcoin casinos continue, everything continues.

Between people who bought accounts, and people who gave a break, I have seen plenty of old accounts that didn't know what bitcoin stands for or how it moves, and I have seen people who had newer accounts, and they look like they registered in 2020-21-22 but they had previous accounts so they are masters of bitcoin. So, account age doesn't really show anything.

Bitcoin will always be volatile and will stay that way even at the face of inflation, but what we are mistaking right now is that FED is trying to stop that inflation, and taking the money back, and giving high interest rates, which means that the inflation will drop, and hence why the drop in crypto, whereas when every nation printed money, the price of bitcoin reached ATH.

Topic: If inflation is rising, why isn't crypto more valuable now? (Read 541 times)