A prominent crypto influencer is doubling down on his belief that Bitcoin (BTC) continues to serve as an inflation hedge even after its deep correction last year.
In a lengthy thread, Bitcoin bull Anthony Pompliano explains to his 1.6 million Twitter followers why BTC is still the best hedge against inflation despite the king crypto’s bearish price action in 2022 when prices of goods and services were soaring.
According to Pompliano, those who dismissed Bitcoin last year missed the big picture.
Markets are forward looking. So when the Fed said they were going to bring down inflation, investors sold their inflation hedge assets to buy treasuries and value stocks. They didn’t wait for inflation to come down. They front-ran what the Fed said they were going to do.
Many people incorrectly pointed out that Bitcoin’s crash in 2022 proved it wasn’t an inflation hedge. That couldn’t be more inaccurate. You would expect inflation hedge assets to fall in price when the Fed is bringing down inflation. Surprise! That is what happened.”
The crypto influencer also says that Bitcoin’s recent 60% price upswing can be attributed to the king crypto’s response to the current macroeconomic situation.
“Bitcoin is up 60% to start 2023. Why is that happening? The market has realized that the Fed has raised interest rates by 4.5% and sold $1 trillion off their balance sheet, yet 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 is forward looking and it knows that inflation is going to be higher, and last longer, than previously believed. The Fed has no choice. Investors need an inflation hedge again. Bitcoin is the big winner.
Pompliano goes on to say that Bitcoins 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 increase, people buy Bitcoin. When inflation expectations decrease, people stop buying Bitcoin.”
Bitcoin is trading for $27,161 at time of writing, a 3% gain on the day.
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