A prominent crypto influencer doubles down on his belief that Bitcoin (BTC) continues to serve as an inflation hedge even after its deep correction last year.
In a long thread, Bitcoin bull Anthony Pompliano explain to his 1.6 million Twitter followers why BTC is still the best hedge against inflation despite the crypto king’s bearish price action in 2022 when prices for goods and services were skyrocketing.
According to Pompliano, those who rejected Bitcoin last year missed the big picture.
“Markets are looking to the future. So when the Fed said it was going to cut inflation, investors sold their inflation-hedging assets to buy Treasuries and value stocks. They did not wait for inflation to drop. They put forward what the Fed said they were going to do.
Many people have incorrectly pointed out that Bitcoin’s crash in 2022 proves that it is not an inflation hedge. It couldn’t be more inaccurate. You expect the price of inflation-hedging assets to fall when the Fed lowers inflation. Surprise! That’s what happened.
The crypto influencer also says that Bitcoin’s recent 60% price surge can be attributed to the crypto king’s response to the current macroeconomic situation.
“Bitcoin is up 60% to start 2023. Why is this happening? The market realized that the Fed had raised interest rates by 4.5% and sold $1 trillion off its balance sheet, but inflation never fell below 6%. Now the Fed is increasing [its] balance sheet and inflation is accelerating.
Bitcoin is reacting to the current macro situation. The market is looking to the future and it knows that inflation is going to be higher and last longer than previously thought. The Fed has no choice. Investors again need a hedge against inflation. Bitcoin is the big winner.
Pompliano goes on to say that Bitcoin’s correlation with inflation is simple, and 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 rise, people buy Bitcoin. inflation goes down, people stop buying bitcoin.
Bitcoin is trading for $27,161 at the time of writing, a 3% gain on the day.
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