Bitcoin attorney and CEO of MicroStrategy, Michael Saylor, predicted bullish sentiment for BTC despite the cryptocurrency’s price decline. After the consumer price index (CPIA) Reveal data for June 2022 shown a 9.1% increase in US inflation, BTC also dropped from over $20,000 to $19,000 within an hour.
Nevertheless, Saylor is optimistic about BTC’s foreseeable growth, arguing that while other currencies face devaluation against the dollar, bitcoin will become the only remaining hedge against this inflation. he tweeted,
Following in Saylor’s footsteps, crypto exchange giant, Binance CEO, Changpeng Zhao, also commented on the CPI stats, without making a comparison to crypto. CZ pointed out that since “80% of the USD in circulation was printed in the past 2 years”, an inflation rate of 9.1% was in fact a phenomenally low figure. He explained that inflation should not be 80%, but “we should see inflation of 500%” since “80% is new = 5x of the original supply”.
BTC’s Inflation Hedging Potential
This isn’t the first time bitcoin has been seen as a store of value and hedge against inflation after drastic macroeconomic data has been released. Earlier this year, research and consultancy firm Gartner published a report highlighting the institutional adoption of bitcoin by referring to the cryptocurrency’s two use cases – BTC as a store of value and BTC use case as leverage.
Store-of-value
Gartner Research analyst Avivah Litan predicted a spike in inflation while looking at the fast printing speed, further noting that the treasurers were in dire need of strong hedge accumulation. She argued that in addition to using gold as a hedge, “now you see government bonds also buying Bitcoin as a hedge against the US dollar and other currencies”. Litan claimed that while gold continues to maintain its stable trading status; Bitcoin is also seen as a store of value not significantly different from gold.
Leverage
Along with BTC’s SoV credentials, the Gartner report also pointed to the cryptocurrency’s utility as collateral against corporate crypto lending. Furthermore, she highlighted crypto’s high interest rates, as well as a wide variety of leverage instruments, including derivatives such as futures and financial options options.
Litan stated,
“You can get much higher rates than you can get from your bank, or you can enter into other types of derivatives and financial instruments”. She added that “traditional companies” [are] compliant access to this DeFi world so they can put their money to work and achieve much higher returns.”