Is Bitcoin a good asset to hedge against inflation?

The standard of living in Spain it is increasing to worrying levels due to the cost of energy, in others. Although not all citizens may be concerned about the effects that these high levels of inflationAt least, investors in cryptocurrencies like Bitcoin.

There is a connection between the increase in inflation for Spanish consumers and the increase in operations that are made with Bitcoin. Bitcoin is the largest cryptocurrency at capitalization levels.

The blame for the increase in inflation lies in the price of energy and food

It is put on the table that as inflation grows Investors looking for havens for their money continue to increase. The effort of the European Central Bank (ECB) to apply policies to stimulate employment and mitigate the increase in price increases has not been effective.

Therefore, there is a new concern among the Spanish, in case there were few already, which is that the price of things is increasing more and more and it is not reflected in their salaries.

On the part of the investors, since there has been a growing interest in the investment of Bitcoin at the end of last year, which during this month of January has been deflating, since it reached its value point on November 8, 2021 with 58.323,78 euros and yesterday, January 19, 2022, he was recovering slightly at 36.528,11 euros.

The increase in prices has not only been a problem in Spain, but also the rest of Europe, the United States and China indicate that the prices of products have increased exponentially. These price levels not seen in China since 1996.

The reason that inflation has skyrocketed in Spain, the rest of Europe, the United States and China has been the increase in energy, food and housing prices.

The consequences of the increase in inflation is that it causes a increased production costs in companies and this puts pressure on sales prices for consumers. This becomes a circle decreases purchasing power of workers and lowers the demand for products.

Bitcoin as a refuge value

The importance of Bitcoin as a refuge value during the past year had its great boom, and this was largely influenced by the increase in inflation in advanced economies.

The high level of inflation in Spain is the result of the combination of several factors. The increasing demand for goods and services, the bottleneck in the ports breaking the supply chain, causing a shortage of raw materials, microchips and labor.

At the end of last year, the cryptocurrency most benefited by these rising levels of inflation and the high price volatility It was Bitcoin, but also the rest of the best-known crypto assets.

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Inflation benefits investment in Bitcoin and gold

The increase in inflation over the past year has benefited an upward movement in the price of Bitcoin, although earlier this year has deflated. On the contrary, it has happened to oro that during this month has had a great increase in value.

Both are considered as shelter values to protect against inflation. Gold has traditionally been the safe haven par excellence, but Bitcoin has become a good option.

Inflation, during the past year, has produced increases both in the value of Bitcoins, and has also produced increases this year in the value of gold, since inflation has a transitory consideration.

It all started last year, since the summer, when there has been a correlation between the value of gold and the value of Bitcoins that has been negative, but its rise began when large investors increased the adjustments of their portfolios for an environment more inflationary.

An increase in inflation has produced a long-term decline in returns of the public debt of the economies of advanced countries. This has caused investors to buy Bitcoins and gold.

On the other hand, it has to be said that Bitcoin is a very volatile value and it is early to know if it is a good refuge asset, we can see that in a few months its value has dropped by thousands of euros, and therefore, there is not enough traction for investors, apart from being short-term investments.

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Source: El Blog Salmón by www.elblogsalmon.com.

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