Things have been going well for Bitcoin these days, as the largest cryptocurrency in the market rose by 3.3% in value, giving it a market value of $44,085–or slightly above the cryptocurrency’s key level.
Aljazeera reports that the rise of Bitcoin’s value follows after a 7% increase in the consumer price index in the US in 2021. This marks the biggest annual inflation gain in the US since 1982. Others even speculated that the increase may be higher, in order to make other risk assets like stocks have a higher value.
Despite Bitcoin’s appreciation in value, there’s still debate on whether it can be considered a hedge against rising consumer prices. Among the arguments for this is that Bitcoin is not in existence long enough to be considered an inflation-hedge status. Duke University professor and Research Affiliate partner Cam Harvey even adds that Bitcoin behaves too much like a speculative asset and that it’s prone to periodic crashes.
Despite the increase in value, an analysis by Blockforce Capital using Glassnode data reveals that there have not been that many new investors since the early December Bitcoin crash. Blockforce’s Brent Munster explains that until the value of Bitcoin goes above $52,000 and holds, he continues to see volatility in the short term.
“However, if we break above and stay above it, sell pressure goes away and it becomes more likely for new participants to start entering the market again. This could trigger the price increase we have all been expecting,” Munster adds.