The US Federal Reserve’s failure on inflation will help drive the price of bitcoin up.
The assesment from Nigel Green, CEO of deVere Group’s, comes as the US consumer price index jumped 7% in 2021, the largest 12-month gain since June 1982. The inflation index increased 0,5% from November, exceeding forecasts.
“Last year, the Federal Reserve said that inflation in 2021 would be at 1,8%,” he notes. “However, US prices soared last year by the highest level in nearly four decades, draining the purchasing power of American households.
“Inflation is everywhere, and it could be around for longer than anyone would like.
“So, why didn’t the Fed – the central bank of the world’s largest economy – not see what was coming?”
Green adds: “This shows how the traditional fiat system, of which it is a key component as it is charged with maintaining price stability, is dangerously out of step with reality.
“I believe this will fuel the demand – and therefore the price – of bitcoin and other cryptocurrencies.”
Be believes that with bitcoin’s fixed supply of 21-million, and institutional investors increasingly moving off the sidelines and into the crypto market, it’s going to continue to outpace gold as a safe haven for capital.
“Money flows to where it gets its best treatment, and with treasuries yielding negative in real terms, moving capital into the Fed is a clear liability for investors.
“In addition, in this current inflationary period, bitcoin has outperformed gold which, until now, has always been almost universally hailed as the ultimate inflation hedge.”