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Inflation soars and Bitcoin hits a new all-time high

News of increasing inflation has pushed Bitcoin and other assets considered to be stores of value higher.

Bitcoin reached a new all-time high of just over $69,000 after new inflation reports were released by the U.S. Department of Labor showing a CPI (consumer price index) of 6.2%.


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The rising inflation and cost of goods likely encouraged investors to move into assets that have been seen as stores of value, helping Bitcoin push to a new price record. 

https://www.tradingview.com/symbols/BTCUSD/?exchange=BITSTAMP

https://www.tradingview.com/symbols/BTCUSD/?exchange=BITSTAMP

Assets other than Bitcoin that are also seen as stores of value and hedges against inflation, like gold and other precious metals, are also experiencing jumps. Like Bitcoin, the price of gold rose as much as 1.88%

https://www.tradingview.com/symbols/FXOPEN-XAUUSD/

https://www.tradingview.com/symbols/FXOPEN-XAUUSD/

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The consumer price index has increased at the fastest rate it has since 1990, with an increase of 0.9% per month over the last year. While assets that are considered to be stores of value appreciated on the inflation news, others, like individual equities, ETFs and indices, dropped. Vanguard's VGT technology ETF was down over 1% earlier in the day.

https://www.tradingview.com/symbols/AMEX-VGT/

https://www.tradingview.com/symbols/AMEX-VGT/

Proponents of Bitcoin have long claimed that its use as a hedge against inflation is one of its most important value propositions. This is due to its finite quantity and deflationary nature. 

Even larger players and institutions are beginning to agree with this notion. In October the legendary investor, Paul Tudor Jones, said in an interview with CNBC that there is a place for crypto. 

“Clearly, there’s a place for crypto. Clearly, it’s winning the race against gold at the moment,” said Jones.

Even JPMorgan's analysts, whose boss is anti-Bitcoin, have given bullish estimates of Bitcoin's price and promoted its use as a hedge against inflation. An investor note JPMorgan sent out in early October said that "Institutional investors appear to be returning to Bitcoin, perhaps seeing it as a better inflation hedge than gold.”

With CPI numbers increasing beyond expectations and increased spending due to the recent passing of the infrastructure bill, store of value assets like Bitcoin could continue to have these reactions.