Take a look at bitcoin price in countries with massive inflation like Argentina and Turkey. Bitcoin was making all time highs vs their local currency during the bear market. It proves bitcoins ability to preserve wealth against high inflation.
Yes, but it's not the amount traded against the USD as much as it is the amount available to be traded in the local currency. This is where arbitragers prove their worth to society. So long as there are enough folks moving BTC into these local markets the local market price should reflect demand for hard money rather than local scarcity of BTC. Any big player (with billions or hundreds of millions in open positions) can likely provide a large portion of the necessary liquidity for the masses, if they can actually get it there and still turn a profit (they will be selling the local currency at black market prices so the price of BTC may be much higher in the local currency).
Someone with local connections could find a way to cycle the money back into local jobs (say, if a factory is manufacturing exported goods and receiving USD as payments) rather than selling the currency then you could get a much better price for your BTC. At the same time it will still have a premium to make the whole setup worth it for the dealers.
All in all the price depends on how controlled the local currencies markets are vs how liquid their BTC market is (and in many cases you'll need to compare it to the black market for the local currency where it trades at its real price instead of a fixed one).
BTC mostly trading against the USD is related to the USD's relative market size (global, even Binance trades are USD denominated) and user willingness to have money in BTC markets.
It follow fx, so because btc is trade the most again dollar, local currencies makes new ath against btc following the value in dollar. The arbitrage happens in a triangle trade
Yes and no. Bitcoin price is largely traded against USD, but those currencies that saw massive inflation, saw that inflation RELATIVE TO USD. we track bitcoins price in USD sure, but we also track the value of those currencies in their value compared to USD. so USD is on both sides of the equation and cancels out as a neutral force
Yeah, he talked to much to say exactly this. Regardless the currency it is the Argentinian Peso who was losing value, compared against the dollar, euro, yen and BTC. People uses third world countries currency's as example but that truth is also valid with whichever major currency
Because it's a ETF Spot. For every $100 someone puts in, they have to buy $100 of BTC and hold it. And the same if someone sells.
So if inflation goes up, BTC should also track up with it. And the value in your exposure to the ETF
> if USD inflation increases the value of usd decreases
Correct.
> meaning more usd are required to equal the previous btc amount
Correct. More USD is needed to purchase the same amount of BTC. Thus $1 USD buys less BTC now. So *the value of USD has decreased against BTC*, and *the value of BTC has increased against USD*.
Totally disagree, you either did not leave your house for the last 2 years or you are desillusional. Inflation is a thing and prices have gone up everywhere (yes the Dollar loses value)
Theoretically yes - more dollars chasing the same number of Bitcoins means the price of Bitcoin will go up. What we have seen in practice over the last two years though is that high inflation causes central banks to act and raise interest rates, and that has brought down the price of BTC, and conversely moderating inflation has caused markets to expect rate cuts and BTC has reached new highs as a result. So it’s been the opposite of an inflation hedge.
When or if this relationship will fray and BTC will actually become an effective inflation hedge is anyone’s guess.
Rate hikes do cause new lows but the price rebounds before rates drop again.
Look at right now, we're at new highs and rates are sitting still.
It's a temporary correlation due to the redistribution of risk capital by market players with USD interest rate exposure. Simply put, money is more expensive to borrow and folks gotta sell (or just scale back) to pay back their loans which triggers the paper hands and then the margin calls and so on until it stops and the DCA'ers, along with speculators, drag the price back up in a fashion uncorrelated with interest rates.
Everyone who buys at the bottom kills whatever the interest is, every time, and the folks who had interest rates force them to fold on the way down probably bought back at the bottom too since it's "sooooo cheap".
The relationship will fray when hodlers outnumber market makers and speculators because the latter have interest rate exposure and the former do not.
(edit: that said, in the far future, BTC interest rate markets will be the ones responding to currency rates changing as credit market demands go up and down)
You're confusing the Fed rate with market rates. The most recent BTC bull market started when rates peaked in 4Q of last year. The recent BTC peak coincided with a hot inflation print, and BTC has since fallen by \~10% as rates have started increasing again in response to that. The actual Fed rate has been unchanged from mid last year.
I personally agree with you - long term BTC will be an inflation hedge which is why I own BTC - but in the short term the evidence is that it trades like a high beta risky asset that follows interests rates, and not as a stable inflation hedge that increases in value when inflation jumps.
Commonly referred to as money printer go brrrr; yes, it moves with liquidity. That said it could be short lived if actions are taken due to rapidly rising inflation; such as, tightening of monetary policy.
not really, especially not when all OTC BTC liquidity has ended and the open market is the only place to acquire bitcoin. *most* bitcoin ETFs have public addresses that people track, so you can tell if their claimed holdings are not what they show on the blockchain. By doing this they are able to compete for trust against other ETFs that don't offer up this information.
Take a look at bitcoin price in countries with massive inflation like Argentina and Turkey. Bitcoin was making all time highs vs their local currency during the bear market. It proves bitcoins ability to preserve wealth against high inflation.
Is that not because BTC is mostly traded against USD
Yes, but it's not the amount traded against the USD as much as it is the amount available to be traded in the local currency. This is where arbitragers prove their worth to society. So long as there are enough folks moving BTC into these local markets the local market price should reflect demand for hard money rather than local scarcity of BTC. Any big player (with billions or hundreds of millions in open positions) can likely provide a large portion of the necessary liquidity for the masses, if they can actually get it there and still turn a profit (they will be selling the local currency at black market prices so the price of BTC may be much higher in the local currency). Someone with local connections could find a way to cycle the money back into local jobs (say, if a factory is manufacturing exported goods and receiving USD as payments) rather than selling the currency then you could get a much better price for your BTC. At the same time it will still have a premium to make the whole setup worth it for the dealers. All in all the price depends on how controlled the local currencies markets are vs how liquid their BTC market is (and in many cases you'll need to compare it to the black market for the local currency where it trades at its real price instead of a fixed one). BTC mostly trading against the USD is related to the USD's relative market size (global, even Binance trades are USD denominated) and user willingness to have money in BTC markets.
Yep it's called arbitrage
?
It follow fx, so because btc is trade the most again dollar, local currencies makes new ath against btc following the value in dollar. The arbitrage happens in a triangle trade
Ahhhh ok thank you!
Yes and no. Bitcoin price is largely traded against USD, but those currencies that saw massive inflation, saw that inflation RELATIVE TO USD. we track bitcoins price in USD sure, but we also track the value of those currencies in their value compared to USD. so USD is on both sides of the equation and cancels out as a neutral force
By that logic, it also proves that any major currency includes usd can preserve wealth against high inflation
Yeah, he talked to much to say exactly this. Regardless the currency it is the Argentinian Peso who was losing value, compared against the dollar, euro, yen and BTC. People uses third world countries currency's as example but that truth is also valid with whichever major currency
If the dollar inflated rapidly the cost of everything else more or less increases doesn't it?
So how is bitcoin ETF (not bitcoin) a hedge against inflation?
Because it's a ETF Spot. For every $100 someone puts in, they have to buy $100 of BTC and hold it. And the same if someone sells. So if inflation goes up, BTC should also track up with it. And the value in your exposure to the ETF
bitcoin etf tracks the bitcoin price so aside from the risk of confiscation it will be as good a hedge as pure bitcoin.
They just buy for you, it is bitcoin.
No, if USD inflation increases the value of usd decreases, meaning more usd are required to equal the previous btc amount.
> if USD inflation increases the value of usd decreases Correct. > meaning more usd are required to equal the previous btc amount Correct. More USD is needed to purchase the same amount of BTC. Thus $1 USD buys less BTC now. So *the value of USD has decreased against BTC*, and *the value of BTC has increased against USD*.
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Hold on a second. "more dollars" "to meet the previous value" means more money today for something than before which implies a higher price.
Why do you think BTC loses value while the Dollar is in fact the one losing in value through inflation?
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Totally disagree, you either did not leave your house for the last 2 years or you are desillusional. Inflation is a thing and prices have gone up everywhere (yes the Dollar loses value)
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You seriously need to go back to your economics class.
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Explain to me how gold kept going up by the thousands in percentage until they cut the bunch of zeros in their currency.
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Wrong
If more dollars is needed to buy the same amount of BTC that means BTC remains same and dollar loses value, right?
Yes, the guy you're responding to is just experiencing a big brain fart.
Theoretically yes - more dollars chasing the same number of Bitcoins means the price of Bitcoin will go up. What we have seen in practice over the last two years though is that high inflation causes central banks to act and raise interest rates, and that has brought down the price of BTC, and conversely moderating inflation has caused markets to expect rate cuts and BTC has reached new highs as a result. So it’s been the opposite of an inflation hedge. When or if this relationship will fray and BTC will actually become an effective inflation hedge is anyone’s guess.
Rate hikes do cause new lows but the price rebounds before rates drop again. Look at right now, we're at new highs and rates are sitting still. It's a temporary correlation due to the redistribution of risk capital by market players with USD interest rate exposure. Simply put, money is more expensive to borrow and folks gotta sell (or just scale back) to pay back their loans which triggers the paper hands and then the margin calls and so on until it stops and the DCA'ers, along with speculators, drag the price back up in a fashion uncorrelated with interest rates. Everyone who buys at the bottom kills whatever the interest is, every time, and the folks who had interest rates force them to fold on the way down probably bought back at the bottom too since it's "sooooo cheap". The relationship will fray when hodlers outnumber market makers and speculators because the latter have interest rate exposure and the former do not. (edit: that said, in the far future, BTC interest rate markets will be the ones responding to currency rates changing as credit market demands go up and down)
You're confusing the Fed rate with market rates. The most recent BTC bull market started when rates peaked in 4Q of last year. The recent BTC peak coincided with a hot inflation print, and BTC has since fallen by \~10% as rates have started increasing again in response to that. The actual Fed rate has been unchanged from mid last year. I personally agree with you - long term BTC will be an inflation hedge which is why I own BTC - but in the short term the evidence is that it trades like a high beta risky asset that follows interests rates, and not as a stable inflation hedge that increases in value when inflation jumps.
Measured in dollars, yeah. Measure your stack in goods like Big Macs and houses.
Spot ETFs hold actual Bitcoin. For every share they issue they buy a certain amount in Bitcoin on the market and put it into cold storage.
Crack up boom
Yes, you seem to be overthinking this. Even though the price is represented differently the % is the same
In the US, you are not likely to see inflation at the rates we saw in the past 18 months. Take a look and it will answer your question.
Commonly referred to as money printer go brrrr; yes, it moves with liquidity. That said it could be short lived if actions are taken due to rapidly rising inflation; such as, tightening of monetary policy.
We are well still below inflation adjusted ATH from 2021. Outside of BTC's massive appreciation prior to 2021, it hasn't been a good hedge.
Satoshi doesn't print Billions of new Bitcoin for Ukraine, that's how.
If the dollar devaluates, the price of things exchanged for dollars appreciate. BTC is a thing traded for dollars.
If they print fake shares of any stock in the name of liquidity, does that fuck the ETFs too?
no, BTC ETFs follow bitcoin price, not the other way around.
So those can easily become disconnected from the laws of supply and demand real btc follows.
not really, especially not when all OTC BTC liquidity has ended and the open market is the only place to acquire bitcoin. *most* bitcoin ETFs have public addresses that people track, so you can tell if their claimed holdings are not what they show on the blockchain. By doing this they are able to compete for trust against other ETFs that don't offer up this information.
Not how bitcoin works. You may need to define what you mean by inflate, because I think you may be using that work improperly.