- US Dollar purchasing value on the decline since 1913
- Unlike inflationary USD, the deflationary Bitcoin drives people to HODL instead of spending it
The last 90 days have been the most profitable ones for Bitcoin as the leading cryptocurrency saw an increase of 173.96 percent in its value. This rise accounted for the majority of the returns BTC saw till date in 2019 which is 189.39 percent.
It’s been these 90 days when Bitcoin went from $4,000 in April to $11,200, the new high of 2019 in June. We added $7,000 that has the US Dollar crashing against the BTC.
Dollar maximalists on suicide watch as the USD drops 40% in a month, now at less than 10,000 satoshis. pic.twitter.com/P4LYsprxJ2
— Michael Goldstein (@bitstein) June 22, 2019
What’s notable is the decrease in the purchasing power of USD. Since the early 20th century, the value of the dollar has declined dramatically due to inflation that was triggered by the Federal government creating more money or when its demand rises or due to constraints on supply.
The Inflationary US Dollar
Since 1913, the dollar has been plummeting in value. At that time, $100 could buy a person the same amount of food, clothing and other necessities as more than $2,500 would buy today. Hyperinflation after World War I reduced the dollar’s value which went through deflation in Great depression only to return after World War II.
Inflation is necessary for an expanding economy and currently, the Federal Reserve targets 2% inflation rate. By keeping the interest rates low, the Fed stimulates spending, thus driving the demand and ultimately economic growth.
As for the impact of USD losing its value, this drives the prices of imports higher making the prices of items like gas and oil (the nation’s biggest import) rise. This decline further diminishes your standard of living.
Another notable effect can be seen on the rich people that keep getting richer, the top 10 percent earners are earning 50 percent of all income while the top 1% taking home 20 percent, the highest percentages recorded in the last 100 years.
The Deflationary Bitcoin
On the other hand, Bitcoin is a deflationary asset like gold (even more so) that is working towards becoming a store of value and recording new highs in each of its cycles. This means the number of Bitcoin produced decreases over time and will eventually stop once it reaches its fixed supply of 21 million.
The prominent reason for Bitcoin hoarding is this deflation that discourages spending and that’s why speculation remains an integral part of the Bitcoin market.
The leading cryptocurrency is currently putting higher highs while making new highs of 2019 that has the crypto community excited and expecting more bulls on the way.
$BTC – putting up higher-highs
Not bearish until close under $10,570 pic.twitter.com/5kzlXuXhJt
— Josh Rager 📈 (@Josh_Rager) June 23, 2019
Price wise crypto trader and investor Josh Rager says we need to regain a new high first before we make our way to $11,500 which is a resistance level.