- Grayscale’s Zach Pandl emphasizes that Bitcoin’s role as a store of value will endure amid persistent inflation and government overspending fueled by upcoming Bitcoin halving.
- Despite short-term challenges posed by potential increases in real interest rates, Bitcoin remains resilient as an inflation hedge, with its limited supply.
On Wednesday, April 10, the United States unveiled its CPI data for the month of March with higher-than-expected inflation at 3.5%. Bitcoin and the broader cryptocurrency market immediately faced a knee-jerk reaction with the BTC price slipping as low as $67,000 before bouncing back to above $70,000, per Crypto News Flash report. As of press time, Bitcoin (BTC) is trading 1.86% up at $70,440 with a market cap of $1.383 trillion.
This has once again ignited discussions around BTC’s behavior as a store of value and a hedge against inflation. Zach Pandl, Grayscale’s managing director of research, suggests that store-of-value assets like Bitcoin (BTC) will remain in demand. This trend is anticipated to persist as the United States government continues its pattern of overspending and maintaining high-interest rates.
“We expect persistent inflation and unsustainable budget deficits to contribute to continued demand for store of value assets, like Bitcoin,” said Pandl. Pandl contends that, with prevailing high inflation rates, the Federal Reserve is unlikely to decrease interest rates in the near future.
Nonetheless, forthcoming events such as the Bitcoin halving, set for April 20, alongside burgeoning economic expansion and increased cryptocurrency adoption, are poised to propel Bitcoin’s price upward. The Grayscale executive added:
“The Fed won’t be able to cut rates for a while with core inflation this high, but booming nominal growth, the Bitcoin halving and adoption trends like tokenization should create a supportive environment for crypto markets.”
Bitcoin As An Inflation Hedge
In comparison to the previous bull runs, BTC has now emerged as a much more mature asset class showing less volatility to Fed policies and following its own trajectory. Furthermore, Bitcoin has also shown some resilience against any volatility happening on Wall Street.
Pandl also noted that although a rise in the real interest rate may present a short-term challenge for cryptocurrency, the sustained demand for store-of-value assets will persist over the long term.
Darren Franceschini, co-founder of Fideum, suggests that the CPI figures surpassing expectations enhance the outlook for Bitcoin’s future, making it even more promising. “Given its limited supply and its reputation as a steadfast hedge against inflation, Bitcoin naturally stands out as a solid hedge for investors navigating the stormy seas of rising prices. And let’s not overlook the upcoming halving event. This periodic halving not only underscores Bitcoin’s scarcity but also tends to spark significant interest and speculation,” added Franceschini, per the Crypto News Flash report.
