Bitcoin Surges to New All-Time High Amid Highest Inflation Levels in 31 Years

November 12, 2021, 9:45 AM AEST - 2 weeks ago

Over the past year, the US Federal Reserve has repeated the line that inflation is “transitory”, so much so that it became a meme. The latest data from the Bureau of Labor Statistics would however suggest that inflation may be more sticky than expected. For the 12 months to October 2021, the CPI hit 6.2 percent, the highest rate recorded in 31 years.

“Transitory” inflation. Source: Twitter, @Bitcoinbaddie

“Transitory” Inflation

In June this year, US inflation hit 5.4 percent, the highest recorded level since 2008. Notwithstanding, the Federal Reserve and US politicians continued to push the narrative that this was “transitory” and due to short-term, pandemic-related supply bottlenecks. In some cases, they even argued that inflation was a good thing.

As per the latest report, the inflation increase was “broad-based”, although energy and used car prices recorded exceptionally high double-digit increases.

CPI. Source: US Bureau of Labor and Statistics

Bitcoin Soars on Inflation News

Upon news of US inflation numbers recording their highest level in over three decades, bitcoin, which is viewed as a store of value and inflation hedge, rose over US$3,000 within hours to print a new all-time of US$69,044.

Shortly after, however, it dipped sharply and at the time of writing was trading at US$64,894 with US$70,000 appearing to be the next psychological resistance-level to overcome.

Bitcoin chart. Source: Coingecko

Gold, bitcoin’s analogue equivalent and more traditional inflation hedge, broke above a long-held resistance at US$1,830 to trade at a five-month high of $1,853. Michael Saylor, however, remained convinced that gold wasn’t the solution to these historic inflationary times:

How Are Things Faring In Australia?

Comparatively speaking, Australia would appear to be doing better than the US, considering the RBA’s latest CPI data that inflation is at 3 percent. This remains at the upper band of the RBA’s target of 2-3 percent inflation.

CPI. Source: RBA

However, it isn’t all good news, as Australians are currently paying record prices for fuel and housing. RBA data shows that across all capital cities, real estate prices have grown between 14-20 percent year-on-year. In more affluent and high-demand areas, there is evidence of house prices increasing by a staggering 30 percent per annum.

As home ownership becomes increasingly out of reach of young Australians, it is no surprise that many have turned to crypto to help make up for lost ground.

Given that BTC holders are currently enjoying a 317 percent increase over the past year, compared to ETH’s stellar performance of 907 percent over the same period, crypto may well offer a solution to both inflation and rampant house price growth.

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