More than 90% of Bitcoin in circulation, its inflation rate has dropped to 1.7 percent, five times lower than that of the US dollar, presenting the popular cryptocurrency as a viable inflation hedge.
The facts of Bitcoin’s dropping inflation are shown in a graphic given by Glassnode co-founder Rafael Schultze-Kraft in a tweet on March 10, who explained that Bitcoin’s inflation rate was following its historical trend. “preprogrammed, fully predictable downwards trajectory.”
As previously reported by Finbold, Bitcoin’s inflation rate in January was 1.8 percent, indicating that the flagship digital currency has lost 0.1 percent in just over a month.
Meanwhile, the US dollar’s inflation rate continues to rise, reaching 7.9% in February. It hasn’t had an inflation rate this high in 40 years, or since 1981., “even before the oil spike,” as tweeted by Holger Zschaepitz, the senior financial reporter at Welt.
This suggests that Bitcoin’s inflation rate was up to five times lower than the US currency at the time of publication.
Mr. Zschaepitz claims that in the United States, so-called core pricing has climbed by 6.4 percent year on year (YoY), while service expenses have increased by 4.8 percent YoY.“the biggest advance since 1991.”
We may expect Bitcoin’s inflation rate to fall even more as it continues to halve its mining rewards, with the next halving event scheduled for May 2024, according to the Bitcoin Clock.
The fact that Bitcoin has a set maximum supply of 21 million tokens, of which 18.98 million or 90% are now in circulation, according to CoinMarketCap data, makes it an efficient inflation hedge.
The USD, unlike the digital asset, is a fiat currency, meaning it has no fixed quantity and the US Federal Reserve can print more anytime it sees fit.
Bitcoin’s inflation rate is also lower, according to some analysts, because it is capable of avoiding the majority of political and economic concerns linked with the US currency.
According to CoinMarketCap data, BTC is presently trading at $39,156, down 8% from its previous high of $42,567 seven days ago.