What did record inflation in the Netherlands mean for Bitcoin?
The price in July reached 10.3%, partly due to rising energy and rental prices. This is evident from figures that Central Statistical Office (CBS) announced last Thursday. It is the first time since 1975 that we measure one above 10%.
Record inflation
In March and April, the stock almost went over 10% with values reaching 9.7% and 9.6%. In June it fell to a value of 8.6% Current energy has a large share in prices. In July, the energy price was 108% more expensive than in July of last year. In food we see increases of about 12.3% compared to a year. Grain, dairy, sugar and ice cream are the main culprits.
The current previous one has to do with the covid pandemic and the war in Ukraine. We have also had unprecedented amounts and euros in recent years. For example, the US government has 80% of all dollars in circulation printed in two years. It is expected to continue in the long term. This is expected to be positive for the price developments of bitcoin (BTC).
Bitcoin a protection against?
In general, bitcoin is also seen a hedge against fiat (fiat currencies are government backed currencies such as the euro or dollar). Unlike fiat currencies, there are a maximum number of bitcoins. It is often earned with gold because it is scarce and can be used as a store of value. Bitcoin has a number of additional advantages over gold. For example, the production of the amount of bitcoin is fixed in the formulas that form the basis of the mining process and no government to print the number of bitcoin. In addition, you can easily send anonymously over the internet.
Yet we do not see the current situation translate into a price increase for bitcoin. When extreme heights reached in 2021, Bitcoin dropped right. This may be ahead of bitcoin already experiencing a strong surge in 2020 and 2021 and related to the peak in an overheated state. Although bitcoin does not know how to be ahead in the short term, the expectations are different in the long term. The Winklevoss brothers, estimated to be some 1% of all bitcoins bought in 2021expect bitcoin in the long run can reach $500,000.