Digital Assets: US Inflation Hits Record; So Do Bitcoin And Ether
Cryptos’ counter-inflationary attributes were in full view Tuesday after October prices data.
Bitcoin and ether rocketed to new all-time highs on Tuesday after the release of October inflation data. Figures from the US Labor Department showed that in October consumers were hit by high prices in a host of everyday products, propelling the Consumer Price Index, a measure of inflation, to jump the most in 30 years. (Cryptonews)
The consumer price index surged 6.2% from a year ago in October, the most since December 1990. Core inflation, stripping out food and energy, increased 4.6%, the fastest gain since August 1991. The data likely triggered a surge in the prices of cryptocurrencies, which are viewed as a hedge against inflation and the depreciation in the purchasing power of money.
The leading cryptocurrency, bitcoin, made a U-turn from its prevailing short term correction and surged more than $2,000, in a short span of about 45 minutes, to a new all-time high of $68,990.90.
Ether followed suit, similarly going vertical and scaling a new record price of $4,865.57.
Kathy Bostjancic, chief US financial economist at Oxford Economics, told the WSJ that a confluence of factors such as supply disruptions, semiconductor shortages, and a shortage of workers in the US were pressurising the uptrend in prices.
“The bigger picture is we’re likely to see inflation climb higher. Things are going to get worse before they get better,” the economist said.
JPMorgan on inflation and bitcoin
Last month, analysts at JP Morgan said in a note that bitcoin – not gold – was the new inflation hedge.
“Institutional investors appear to be returning to Bitcoin, perhaps seeing it as a better inflation hedge than gold,” they said. “The reemergence of inflation concerns among investors has renewed interest in the usage of Bitcoin as an inflation hedge.”
However, today’s CPI data also triggered a sharp rally in gold, which took out the $1,830 resistance and touched a high of $1,870.
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