Bitcoin vs Inflation

BTC News #1

Welcome to the first edition of BTC News, a publication by Blockedia. Blockedia is a new brand that I will use to write about the latest blockchain data in an effort to help the new generation of corporate workers understand digital assets and the factors surrounding them.

This publication called BTC News, will focus strictly on Bitcoin data and latest news. The goal will be to give a daily 5 minute article with one interesting Bitcoin metric and the latest news for the day.

We will be releasing another publication focused on on-chain data for altcoins, so stay tuned.

With that said, let’s get started with our first edition.

A major headline recently has been the next stimulus package and negative interest rates. It’s for this reason I’ve decided to write about Bitcoin vs inflation. Inflation is the rate at which our purchasing power changes. A rising inflation rate means the fiat money we hold can buy less. More stimulus and negative interest rates help to increase the inflation rate by adding more money supply into the market.

If you follow crypto Twitter, you will see many traders talking about $DXY, which is the Dollar Currency Index. $DXY falls as the US dollar is worth less. This means it takes more dollars to buy the same things.

Here is a chart showing the downtrend the $DXY has had since the Fed put out more stimulus and lowered interest rates due to COVID.

So what does this have to do with Bitcoin?

Well, it actually has everything to do with Bitcoin. Bitcoin is recognized as a store of value. Meaning, while the worth of your savings is dropping because of inflation and more money supply, investors holding Bitcoin are actually gaining in wealth because it takes more dollars to buy a single Bitcoin.

You may have heard that Bitcoin has been on a massive rally lately. Well, that may have a lot to do with the devaluing of the worlds global reserve currency, USD. Businesses and investors want to store their wealth in something that doesn’t lose value because a group of people have decided to print more (brrrr).

Did you know Bitcoin has its own interest rate?

New Bitcoins are released into the market after every 10 minute block is mined. Every 4 years the amount of new Bitcoins that is put into the market after every mined block is cut in half until the full 21 million are released into the network. This makes Bitcoin disinflationary.

Do you see the genius yet? If not, it’s okay it will come soon.

Take a look at the Bitcoin price vs its own inflation rate.

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