Firstly, what happens during inflation?
During inflation there is a sustained increase in the general price level of goods and services in an economy over a period of time, resulting in a decrease in the purchasing power of money.
This mostly happens when more money(fiat) is injected into an economy.
When this happens people look for other assets to keep their money in, assets which will not lose value. And since cryptocurrencies e.g bitcoin is anti inflation( the supply of bitcoin is capped at a specific number, once it’s reached no more bitcoin can be mined). This being said, during an inflation, if people invest more in cryptocurrencies to keep their money valuable over a period of time, the prices of cryptocurrencies are expected to see an upward trend.
But the 2021/2022 inflation which is the highest to be recorded in 40 years proves otherwise with cryptocurrencies experiencing a downward trend, what can we say about the true impact of inflation on crypto?
Drop your opinions in the comments below.