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Is Bitcoin protection against inflation or a Bubble about to burst?

Bitcoin (BTC) is the ultimate protection against rampant inflation precipitated by reckless central banks and their money-printing to cryptocurrency fans. However, for the skeptics, Bitcoin is a mirage and a bubble that has swelled past $2 trillion due to speculation fuelled by the immense amount of easy cash sloshed in the global economy reports finance.yahoo.com.

 

Bitcoin price

Bitcoin price

BTC about to face its biggest test yet.

Both the theories are not utopia, but the real test is upcoming and will decide if Bitcoin is worth solid gold or a bubble that will go bust. Bitcoin resulted from financial misconduct by Central Banks and inflation caused by the blatant printing of fiat currency. It was a means to bypass the central banks and government, which was clueless about tackling Wall Street’s biggest calamity of the time.

However, Crypto surged phenomenally after the COVOD-19 pandemic when Governments injected billions of dollars in the form of stimulus to alleviate the sufferings of the commoner who was reeling under lockdowns and choking the economy. A large portion of this money found its way to digital assets and led to the soaring of BTC values by more than 305% in 2020. The following year it again grew by 60%, and the values reached almost $69,000 in early November.

However, as the adage goes, after the rise, a fall is inevitable, and BTC has been on a downward trend, and the hawkish mode of Central Banks has been blamed for the downslide. The next step will be the hike in interest by the Fed, and it needs to be seen if the choking of liquidity will cripple the crypto ecosystem.

BTC is already 40% down from its all-time highs

It looks that what the skeptics have been predicting could become a reality. The BTC is already 40% down from its all-time highs. The situation is not much different with No. 2 coin Ether and other “altcoins,” which have also suffered steep declines.

The surging inflation has finally woken the Fed, and a hike in interest rates is a distinct possibility. However, Biden’s massive stimulus plan, Build Better Back, has hit a roadblock and is unlikely to see the light of the day. Therefore it needs to be seen what effect the choking of aid and hike in interest rates on the crypto market.

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