17 June 2022

Bitcoin's Wild Inflation and the Crypto Promise That is Getting Harder and Harder to Believe

People are (rightfully) nervous about the dollar getting hit with inflation. Over the last year, the dollar has dropped in value by 8.5% . Which is to say, inflation has been 8.5% in the last YEAR.

By contrast, inflation in bitcoin in the last WEEK has been 30.4%.

Over the last year, bitcoin has moved in one week nearly as much as the dollar has moved in the last year - an average of 2.7% a day and 7.4% a week. (Keep in mind that targeted inflation for the dollar is 2% and for years annual inflation for the dollar has been about that, less than bitcoin moves in a day.)

Stocks give you a share of the company's earnings.
Bonds give you interest payments.
Rental property gives you rental income.

All of those assets come with risk and their value will rise and fall but they do promise profit, interest and income. Crypto makes no promise of any income or return. Its only promise is that it will become a preferred currency because it is more stable than the dollar or euro. Demand will rise for it over time because of its superiority to the dollar. That superiority is largely based on the promise of its relative stability compared to the dollar.

That promise is harder and harder to believe.

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