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Bitcoin an inflation ‘shield’ for institutional investors

Yasmine Masi15 November 2021
Ether, Bitcoin and other cryptocurrencies represented as actual coins

Institutional investors will come to regard the decentralised cryptocurrency Bitcoin as a hedge against inflation despite its price to continue surging until at least the second quarter of 2022, according to Nigel Green, CEO at deVere Group.

 Green said Bitcoin is widely regarded as a shield against inflation mainly because of its limited supply, which is not influenced by its price. This inflation shield will result in more interest from major institutional investors in the crypto market, as their capital, expertise and reputational influence further increase prices.

Green’s prediction comes as the value of the cryptocurrency hit another all-time high at US$69,000 earlier this week and inflation has surged to a 31-year high in the US, with the Federal Reserve likely to raise interest rates sooner rather than later.

“Prices paid by U.S. consumers jumped the most since 1990 last month, climbing a staggering 6.2% from a year earlier. This latest data out of the U.S. will only compound global fears about inflation as price pressures run hot around the world.

“Inflation in the UK could rise above 5% by early next year, Euro area annual inflation is 4.1% in October 2021, up from 3.4 % the month before, and the cost of goods leaving Chinese factories surged by another record rate last month – 13.5% – and there are increasing signals that consumers are now feeling the pain,” he said.

Green said it is this inflationary backdrop that the price of Bitcoin and other major cryptocurrencies can be expected to continue their upward trajectory.

“Bitcoin’s gravitational pull on other digital assets will show itself again this week, pulling up other major cryptocurrencies as it maintains its own strength. We can expect those cryptos involved with fintech development, such as Ether, Solana and Cardano, to do particularly well.”

“In this inflationary period, Bitcoin has outperformed gold, which has been almost universally hailed as the ultimate inflation hedge – until now.”

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