In a world of an uncertain economy, where inflation and rising debt become pressing issues, many wonder whether Bitcoin can prove to be a stable asset in the long run. Is this cryptocurrency, designed as a hedge against inflation, still durable in the face of current challenges?
Bitcoin, also known as the “king of cryptocurrencies”, has been observed for a while now for its ability to serve as a hedge against inflation. In recent years, it has been noticed that its performance is correlated with the S&P500 index. Consequently, growing economic concerns negatively impact Bitcoin’s results.
However, despite these concerns, Vero Data’s founder, Will Clemente, believes that Bitcoin can still prove to be one of the best assets to hold in the long run, especially in the face of the USA’s economic problems. For Clemente, the key is comparing the pace of economic growth to the pace of debt accumulation. Recent analyses indicate that debt creation in the United States is outpacing economic growth. In such a scenario, Bitcoin may present an attractive alternative.
Another argument in favor of Bitcoin is the current economic climate. With currency depreciation and rising inflation, there’s an increasing need for an alternative monetary system. For many, Bitcoin is the answer to these challenges.
Long-term data confirms this optimism. The number of addresses holding at least 0.01 BTC has consistently grown over the last 12 months. Over 1.71 million new addresses have joined this category in the past year, and the amount of Bitcoin in exchange reserves is decreasing.
Of course, nothing is certain. Recent concerns revolve around the impact of interest rate changes on Bitcoin’s price, as interest rates determine liquidity availability. Nevertheless, looking at the long term, there’s a great chance that Bitcoin will overcome these adversities and appreciate in value.
Although Bitcoin encounters short-term obstacles, many signs indicate that it will remain a strong asset in the future. In the face of global economic tensions, this cryptocurrency might prove to be an important tool to hedge against market unpredictability.
Photo by Aleksi Räisä on Unsplash
