The consumer price index has shown record growth since the fall of 2008, outpacing even the most optimistic forecasts. From April 2020 to April 2021, inflation in the United States increased by 4.2%. But why, amid this inflation, we do not see crowds of scared investors investing in the main cryptocurrency on the market to hedge risks?
After all, Bitcoin is interesting as an effective remedy for inflation, at least because it has a limited supply of 21 million coins. Consequently, such an asset not only should not “sink” in price over time but can also gain even greater momentum. In this, it is really similar to gold and is in stark contrast to American dollars, which can be printed indefinitely, following the credit policy of the US Federal Reserve. In addition, in recent years, her plans have been very aggressive, and the Fed chairman himself said that it is necessary to act decisively so that the pandemic does not cause a recession.
At the same time, Bitcoin is letting down its “speculativeness”. Since it is itself an entirely new asset class, there are concerns about its expansion into broader markets. At critical moments for the global economy, all currencies "sink", including digital ones. And BTC pulls altcoins down "for the company" as well.
CBDC, which is gaining strength, is also becoming a new rival to the dollar. Almost every country today is eyeing this innovative concept in one way or another, while global USD reserves fall to 59% a record low in the past 25 years. The last time an even lower level of 60% was recorded was in 1995. Analysts, in turn, argue that the decline in the dollar's position is due to competition from other world currencies by central banks that use them for international payments.
And while the dollar remains the dominant reserve currency, the possibility of further declines makes people wonder if the situation will get worse, looking for alternative investment options. And given the fact that in the latest reports of the IMF there is a clear tendency for world states to “move away” from the dollar, institutions are also beginning to select alternative assets for reserve baskets.