Bitcoin’s (BTC) all-time high of $69,325 has not been hedged against inflation – a reference to the notion that this “digital gold” is a successful store of value. When measuring inflation, despite its remarkable rally in recent months, Bitcoin is still technically worth less than its previous peak in November 2021.
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According to the US inflation calculator, the cost of a single BTC today – at around $67,000 at the time of writing – would have to reach $78,905.45 to reach a record high in 2021, the year it last hit , reaching the same value as Bitcoin. Of course, this could be more of an indictment of the US dollar than Bitcoin, which is up over 230% year-over-year.
In other words, Bitcoin's market peak set this week would have the same purchase value as $60,907 in 2021, $55,097.30 in 2017 and $52,363.34 in 2013 – years in which there were There was a significant increase in the price of the first cryptocurrency.
That a volatile asset like Bitcoin has not kept pace with inflation (at least since the last ATH) is a red herring considering how far it has already come. For example, a Bitcoin in today's wallet would be worth $48,395.13 in 2008, when it first came onto the market, and had no market value at all. Bitcoin first reached parity with the US dollar in February 2011 and has been trending upwards ever since.
The current rally – spurred by the successful launch of Bitcoin exchange-traded funds (ETFs) on the spot market and other factors – has cemented in people's minds that crypto is not going away, even if it stops rising. The list of those willing to declare Bitcoin dead is shrinking and the list of supporters is constantly growing.
Additionally, given the currency's rate of depreciation against the dollar, Bitcoin hit previous new all-time highs outside the US – in the EU, Japan, Turkey, etc. The US Dollar Index (DXY) is up 10.7% since November 2021, which means that many currencies around the world have lost value.
One of Bitcoin's biggest value propositions is the idea that it retains its value better than fiat currencies. While the Federal Reserve appears to have guided the economy ravaged by a pandemic-related global shutdown to a “soft landing,” many have still lost faith in technocrats' ability to manage U.S. finances. In total, the US government printed $13 trillion during the Corona crisis alone, which was reflected in increased prices for consumer goods.
Interestingly, Bitcoin is growing in parallel with physical gold, which crypto researcher Nicole Acheson attributes to increased buying pressure from central banks around the world. “The World Gold Council reported that central banks increased official gold reserves by 39 tons in January, more than double the net increase in December,” she wrote in the “Crypto Is Macro” newsletter, noting that this was in Turkey , China, India and Kazakhstan will lead the purchases.
It is difficult to say how Bitcoin will perform in the long term, but psychologically many holders are sure that the network will theoretically be limited to 21 million coins, which could be described as a more predictable and potentially deflationary “monetary policy”. This is even more relevant considering how well Bitcoin has performed during a period of elevated interest rates, which most analysts thought would depress crypto prices.
Since the beginning of the year alone, Bitcoin is up more than 50%, hitting an all-time high just weeks after the launch of Bitcoin ETFs at a time of strong market pessimism. It is not out of the question that the price will increase by another $10,000, exceeding its inflation-adjusted price. Anyway, the true value of Bitcoin shouldn't be its price in dollars, but what you can do with it.
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