Ultimate Resource For Bitcoin’s Inflation Rate VS Gold And The U.S. Dollar

Bitcoin’s Inflation Is Now 5X Lower Than U.S. Dollar’s And Decreasing. Ultimate Resource For Bitcoin’s Inflation Rate VS Gold And The U.S. Dollar

With more than 90% of Bitcoin (BTC) in circulating supply, its inflation rate has gone down to 1.7% and is now five times lower than that of the United States dollar (USD), positioning the popular cryptocurrency as a potential defense against inflation.

This Chart Shows The Historical Actual Inflation Rate In Realtime Along With The Projected Future Inflation Rate.

The details of Bitcoin’s declining inflation are demonstrated with a chart that Glassnode’s co-founder Rafael Schultze-Kraft shared in a tweet on March 10, who explained that Bitcoin’s inflation rate was following its “preprogrammed, fully predictable downwards trajectory.”

As Finbold reported earlier, the inflation rate of Bitcoin in January was 1.8% showing that the flagship digital asset has decreased by 0.1% since in a little over a month.

Meanwhile, the inflation rate of the U.S. dollar continues to soar, hitting 7.9% in February.

This is its highest inflation rate in 40 years or since 1981, “even before the oil spike,” as tweeted by Holger Zschaepitz, the senior financial reporter at Welt.

This means that the inflation rate of Bitcoin at press time was as much as five times lower than that of the U.S. dollar.

According to Mr. Zschaepitz, the so-called core prices in the U.S. have recorded a 6.4% year-on-year (YoY) increase, while the costs of services increased 4.8% YoY, which is “the biggest advance since 1991.”

Behind The Scenes Of The Growing Divergence Between BTC And USD Inflation

As Bitcoin continues halving its mining rewards, with the next halving event taking place in May 2024, according to the Bitcoin Clock, we can expect its inflation rate to decrease even further.

On the other hand, the inflationary rate of the U.S. dollar is predicted to continue climbing.

What makes Bitcoin an effective hedge against inflation is having a fixed maximum supply of 21 million tokens, of which 18.98 million or 90% is currently in circulation, as per CoinMarketCap data.

Contrary to the digital asset, the USD is a fiat currency, which means it has no fixed supply, and the U.S. Federal Reserve is able to print more whenever it deems necessary.

According to some experts, Bitcoin’s inflation rate is also lower because it is capable of circumventing the majority of political and economic risks associated with the U.S. dollar.

Updated: 3-4-2023

Bitcoin’s Inflation Rate Is Now Three Times Lower Than U.S. Dollar’s

With over 90% of Bitcoin (BTC) in circulating supply, the asset’s inflation rate has fallen significantly over the years to beat that of the United States dollar (USD) by at least three times.

This is placing Bitcoin to act as a possible hedge against inflation and economic uncertainty.

Bitcoin’s dropping inflation rate stems from the cryptocurrency’s fixed supply of 21 million BTCs. The rate drops after every four years during the halving event.

As a result, the maiden cryptocurrency’s inflation rate has been on a steady decline since its inception in 2009 to stand at 1.79% as of March 4, data by crypto analysis platform WooBull indicates.

At the same time, the annual inflation rate of the U.S. dollar in 2023 stands at 6.4%. The value peaked at 7% in 2021, data by USInflationCalculator indicates.

This implies that the U.S. dollar inflation rate is 3.57 times higher than Bitcoin.

Intrigues Of Bitcoin’s Dropping Inflation Rate

Bitcoin’s ability to record a low inflationary rate is because of the asset’s deflationary model. The design means that the inflation rate decreases post-halving events.

The rate is determined by the reward system for miners, which is split in half with each halving event. During the halving event, Bitcoin rewards for miners are reduced by half.

This means that the number of Bitcoins produced through mining is halved, with the next event estimated to take place in May 2024.

In contrast, the U.S. dollar inflation rate will likely rise as the currency’s value decreases over time. The plunge in value is primarily due to excessive printing and the diminishing purchasing power of each dollar.

Notably, inflation can be caused by several factors, including an increase in the money supply, a decrease in demand, or a decrease in production.

Experts have also opined that Bitcoin’s inflation rate remains lower due to its decentralization nature, meaning the maiden crypto can circumvent most political and economic risks linked with the U.S. dollar.

Updated: 4-16-2024

Bitcoin’s Inflation Rate (0.8%) And Store Of Value Proposition VS Gold (1.4%)

Many analysts are looking at how the cryptocurrency’s inflation rate will compare to gold’s after the halving, expected on April 19.

With the Bitcoin halving expected to occur in the next four days, many analysts have suggested that the event could affect the cryptocurrency’s status as a store of value.

At the time of publication, roughly 630 blocks are left to mine before the Bitcoin halving occurs, meaning the monumental event in the crypto space will happen around April 19.

In March, the BTC price reached an all-time high of more than $73,000 after the United States Securities and Exchange Commission approved the listing and trading of spot Bitcoin exchange-traded funds on exchanges in January, with the crypto asset continued to show volatility in its price.

Many crypto users and financial analysts claim that Bitcoin could be an effective hedge against inflation as countries’ central banks, including the U.S. Federal Reserve, devalue fiat currency by printing money.

In contrast, there is a fixed supply of 21 million BTC, roughly 19.7 million of which have already been mined.

On April 19, the halving — which is the fourth in Bitcoin’s history, with the third occurring in May 2020 — will cut the block reward for miners from 6.25 BTC to 3.125 BTC.

The event will effectively cut Bitcoin’s inflation rate in half from roughly 1.7% to 0.85%, decreasing the new supply of the cryptocurrency and potentially causing its price to rise if demand remains constant or increases.

Historically, all BTC halving events have eventually resulted in price increases. Many users in the U.S. already use the cryptocurrency as a hedge against the dollar’s inflation, while more users in countries with hyperinflation, like Argentina, could also turn to Bitcoin.

“It’s becoming increasingly clear that Bitcoin and digital assets offer more than simply ‘paying with crypto’ for users,” said Gnosis Pay CEO Marcos Nunes.

“Rather, these assets serve as a lifeline for millions across the globe who live in countries with economic turmoil and hyperinflation.”

How countries adopt or handle Bitcoin through regulation can impact the cryptocurrency’s price. Many analysts closely monitor the United States’ approach to regulation at both the state and federal levels, as the country is responsible for roughly a third of all mining.

Winning Against Gold?

Greater scarcity following the halving will likely make Bitcoin’s store of value proposition more appealing to crypto users. Many also consider how the cryptocurrency will compare to gold after the event.

The precious metal has been touted as a more traditional store of value to traders not necessarily interested in crypto, but that dynamic could change.

Bitcoin’s price volatility after the halving likely will not change anytime soon. Still, its inflation rate is expected to drop below gold’s again, as miners will increase the percentage of the gold supply at a greater rate than crypto miners will increase the percentage of the Bitcoin supply.

Gold bug Peter Schiff has yet to directly address this issue on social media, focusing his recent posts on the price of Bitcoin.

The upcoming halving and historical data suggest that the last BTC block reward could come in the year 2140 — more than 100 years from now.

At that point, according to the Bitcoin white paper, the incentive for miners “can transition entirely to transaction fees” with all 21 million coins mined.

Updated: 4-24-2024

Bitcoin’s Inflation Rate Is Now Lower Than Gold

Meanwhile, analysts say the latest halving is symbolically significant but unlikely to have a noticeable price impact.

It’s been roughly four days since Bitcoin (BTC)’s fourth halving event occurred, and market watchers have amassed enough data to give an early verdict on its effects.

For one, Bitcoin’s supply inflation rate has collapsed, as expected. Each Bitcoin block—mined roughly once every ten minutes—now produces just 3.125 new BTC, half of its former 6.25 BTC block subsidy.

Before the halving, 900 BTC was generated daily, fueling a 1.7% inflation rate. The new figures are roughly equivalent to 450 BTC per day, and an annual inflation rate of 0.85%.

According to a new report from Glassnode, these metrics place the network’s supply issuance rate decisively below that of gold’s 2.3%—a historically significant asset to which Bitcoin is frequently compared.

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“We tried gold, it didn’t work…Bitcoin does provide HOPE for us, the working class.” – Natalie Brunell 🔥🔥#Bitcoin pic.twitter.com/ymACw0MPmS

— Swan (@Swan) April 15, 2024

The argument, according to Bitcoin bulls, is that Bitcoin’s digital nature makes it more divisible and portable than precious metals, thus advantaging BTC as a modern-day medium of exchange.

Thanks to the halving, Bitcoin supply will be more limited than gold, meaning it will, in theory, store its value better over time rather than being inflated away.

In terms of Bitcoin’s price movements, however, some analysts believe the halving is otherwise irrelevant.

“Issuance is a fraction of the on-chain transfer volumes, spot volume, and derivatives volume we see today, and is currently equivalent to less than 0.1% of the aggregate capital moved and traded on any given day,” wrote Glassnode in an on-chain analysis report on Tuesday.

That means the number of coins the halving takes off the market is a drop in the ocean compared to the number of existing coins that trade hands and affect the price daily. In a video presentation last week, Glassnode’s lead analyst James Check called the halving a “narrative game” that “really doesn’t matter.”

Unlike previous halvings, Bitcoin’s price managed to break its previous all-time high before the end of its fourth halving epoch, seemingly outperforming due to the launch of U.S. Bitcoin spot ETFs months prior.

Before its fund went live, BlackRock’s Larry Fink repeatedly advertised Bitcoin as a form of “digital gold” to investors.

However, when measuring price gains between halvings, the asset’s price rose just 569% in the fourth epoch compared to 1,336% in the third.

This, Glassnode suggests, shows diminishing BTC investment returns between halvings, which is “a natural result of the growing market size, and the scale of capital flows required to move it.”

The mining industry has also emerged unscathed so far. Despite the halving delivering a major cut to miner revenues, Bitcoin’s network hash rate had been at or near all-time highs moving into every halving event, including the most recent one.

On-chain data now shows that miner revenues actually surged after last week’s halving, thanks to the newly launched Bitcoin token protocol “Runes” driving up network transaction fees.

Updated: 4-25-2024

Bitcoin Inflation Rate At An All-Time Low

Bitcoin’s inflation rate has reached a new milestone, recording an all-time low of approximately 0.8%, just days after the latest Bitcoin halving.

With 93.3% of Bitcoin already mined, translating to 19.6 million out of the possible 21 million BTC, the scarcity factor is anticipated to drive demand further, potentially fueling a surge in the price of the leading cryptocurrency.

Comparatively, fiat currencies experience higher inflation rates due to government controls and economic policies.

In 2023, countries like Argentina faced extremely high inflation rates, reaching 161.0%, as per data from Inflation Data.

The recent halving event is expected to further reduce Bitcoin’s inflation rate, influencing both its scarcity and investor behavior.

Bitcoin Price Increased an Average of 3,230% After Each Halving

Historical data reveals a trend of explosive growth in Bitcoin prices following each halving event, according to a report from CoinGecko.

After the first halving in 2012, the price of Bitcoin surged by 8,858%.

Although subsequent halvings saw diminishing returns—with increases of 294% and 540% respectively—the pattern of price spikes post-halving remains evident.

The completion of the fourth halving has left the cryptocurrency community speculating about the short-term market dynamics.

Just recently, Bitwise said that while the month immediately following the halving typically sees a modest drop in price, the subsequent year often witnesses exponential gains.

The asset manager noted that following the 2012 halving, Bitcoin experienced a meager 9% increase in the month post-halving, only to skyrocket by a staggering 8,839% over the following year.

Similar patterns were observed after the 2016 and 2020 halvings, with Bitcoin’s price surging significantly in the year following each event.

Historically, the Halving Has Been Good for Bitcoin’s Price Long-Term (a Look at the Data)

The change in bitcoin’s price in the year following the halving:

2012: 8,839%
2016: 285%
2020: 548%

The change in bitcoin’s price in the month following the halving:

2012: 9%
2016: -10%… pic.twitter.com/aaXSakLfko

— Bitwise (@BitwiseInvest) April 16, 2024

Bitcoin’s Market Cap Pre and Post-Halving

The fluctuations in Bitcoin’s market cap around halving events offer insights into consumer behavior during these pivotal times.

Initially valued at $123.3 million during the first halving, the market cap soared to $947.4 million shortly thereafter.

Similar patterns were observed in subsequent halvings, with the market cap experiencing significant shifts.

These movements reflect a tendency among Bitcoin holders to speculate around halving events, often opting to hold onto their assets in anticipation of value increases.

The analysis of pre and post-halving periods suggests a strong tendency toward holding Bitcoin, which is believed to become more valuable as future supply constraints tighten post-halving.

Ultimate Resource For Bitcoin’s Inflation Rate VS Gold And The U.S. Dollar

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