This year, Bitcoin has plunged in value, weakening crypto enthusiasts’ argument that it can be an effective hedge against inflation during the economic turmoil.
Bitcoin advocates have always suggested that its scarcity would protect its value during rising inflation. Billionaire investor Paul Tudor Jones remains bullish on Bitcoin as an inflation hedge, while Skybridge Capital CEO Anthony Scaramucci dismisses the idea.
While speaking on CNBC’s Squawk Box, the global investment management CEO stated that Bitcoin (BTC) is an attractive investment asset. Still, it has not reached the “wallet bandwidth” required to be considered an inflation hedge.
He also noted that BTC is an early adoption technical asset, which must be held in around a billion wallets to hedge against inflation. Presently, the number of BTC wallets worldwide stands at approximately 200 million.
Bullish on Bitcoin
Not long ago, Scaramucci had compared the ongoing crypto winter to the DotCom bubble in the 2000s. The latter has eliminated numerous meaningless projects, but some like Amazon and eBay survived the crash and now are the pioneers in their field.
Scaramucci believes the bear market in the digital asset industry will have the same effect, and Bitcoin will emerge as a winner in the end.
Scaramucci remained bullish on Bitcoin and the overall crypto market, pointing to recent moves from BlackRock to launch a new private spot Bitcoin trust with Coinbase as the custodian. He anticipates that the market is filled with a ton of short positions right now, which could result in people getting their faces ripped off when they are least expected.
Earlier, BTC was touted as a potential hedge against inflation, given its fixed supply of 21 million coins. However, according to a new IMF report, this narrative has changed over time as Bitcoin has been observed as being increasingly correlated to the stock market.
Consequently, Steven Lubka, managing director of private clients at Swan Bitcoin, still argued that BTC should be considered an inflation hedge.
While Bitcoin has failed to act as an inflationary hedge during the global inflation events this year, he believes that this inflation has been predominantly caused by supply shocks rather than monetary expansion, where Bitcoin can hedge against inflation more effectively.
BTC Price Analysis
The top coin tumbled massively last week, dumping from a multi-month high of over $25,200 to a multi-week low of under $21,000.
The asset had calmed and traded over the weekend, mostly between the $21,000 and $22,000 range. But the start of the current week lacked the necessary spark.
Yesterday BTC saw a few price dips below $21,000, but BTC recovered those losses immediately. Bitcoin has jumped above $21,000, and its market cap has managed to defend the $400 billion level.
Disclaimer: The author’s comments and recommendations are solely for educational and informative purposes. They do not represent any financial or investment advice. Always DYOR (do your own research)
