A prominent cryptocurrency influencer is doubling down on his belief that Bitcoin (BTC) continues to serve as a hedge against inflation even after its deep correction last year.
In a lengthy thread, Bitcoin bull Anthony Pompliano Explain to his 1.6 million Twitter followers why BTC remains the best inflation hedge despite the crypto king’s bearish price action in 2022 when prices for goods and services skyrocketed.
According to Pompliano, those who dismissed Bitcoin last year missed the big picture.
“Markets look to the future. So when the Federal Reserve said it was going to reduce inflation, investors sold their inflation-hedging assets to buy Treasuries and appreciate stocks. They did not wait for inflation to come down. They advanced what the Fed said they were going to do.
Many people incorrectly pointed out that the Bitcoin crash in 2022 proved that it was not a hedge against inflation. That couldn’t be more inaccurate. Inflation hedge assets would be expected to fall in price when the Fed is lowering inflation. Surprise! That’s what happened.
The cryptocurrency influencer also says that the recent 60% rise in Bitcoin’s price can be attributed to the king of cryptocurrency’s response to the current macroeconomic situation.
“Bitcoin is up 60% to start 2023. Why is that? The market noticed that the Fed raised interest rates by 4.5% and sold $1 trillion off its balance sheet, but inflation never fell below 6%. Now the Fed is increasing [its] balance sheet and inflation is accelerating.
Bitcoin is responding to the current macro situation. The market looks to the future and knows that inflation will be higher and last longer than previously believed. The Fed has no choice. Investors again need an inflation hedge. Bitcoin is the big winner.”
Pompliano goes on to say that Bitcoin’s correlation to inflation is simple and that traders should learn to ignore all the “noise” in the market.
“Bitcoin is the best inflation hedge asset in my opinion. There is a lot of noise in the market. Learn to ignore it. When inflation expectations rise, people buy Bitcoin. When inflation expectations decline, people stop buying Bitcoin.”
Bitcoin is trading at $27,161 at the time of writing, a gain of 3% on the day.
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