The value of Bitcoin rose on Friday after a new report found that U.S. consumer prices are growing at the fastest rate since 1982
The cryptocurrency climbed 4.4% to $50,101 after the report on inflation became public. This surge is also a recovery from last weekend when the coin dropped 21%.
Bitcoin has been promoted in the past as a hedge against inflation, partially because there are a finite amount of its tokens in existence. Hedges are investments that counter risk– which in this case would be the effect inflation may have on the economy.
“Bitcoin is still seen as an inflation hedge, especially for younger investors,” said Matt Maley of the trading firm Miller Tabak + Co. “Since it has few restrictions right now, it is seen as a flight to safety asset for some investors.”
But some have also argued against this notion, questioning whether the assumptions of Bitcoin’s value storage hold up under closer scrutiny:
“If Bitcoin is ‘digital gold’ and gold is an inflation hedge, then it follows that Bitcoin is too, right? Unfortunately, there is no evidence to back this up, and even the relationship between inflation and gold has been tenuous over the years,” Noelle Acheson of Genesis Trading wrote in a report. “Longer term, however, gold has more than held its value while fiat currencies have declined; Bitcoin could end up doing the same.
CPI reports fastest rate of inflation since 1982
Consumer prices in the US rose 6.8% in November in the largest increase since 1982, according to the figures that were released by the Consumer Price Index.
The financial crunch takes place after the punishing months of the pandemic; now with unemployment at almost historic lows, a key measure of inflation rose to heights not approached since June of 1982.
Consumer prices rose by a staggering 6.8%, without seasonal adjustments over the last year, the Bureau of Labor Statistics reported Friday.
Without counting prices for food and energy, which are traditionally more changeable, inflation rose an incredible 4.9% over the same period, from November of 2020 to last month, reaching levels not seen since June of 1991
There was the tiniest of month-to-month decreases on a seasonally adjusted basis from October 2021 through November, with prices increasing 0.8% last month compared to the 0.9% increase they saw in October.
Without counting the costs of food and energy, prices rose 0.5% last month, which also represents a slight decrease from the 0.6% increase in October.
Americans are feeling the pinch of inflation at the pump more Ethan anywhere else, however, gas prices jumped 58.1% over the last year ending in November. Marking a return to the dark days 1980, this showed the largest increase since April of that year