• Cryptocurrency markets are rallying as inflation reaches a 30-year high

  • On Wednesday, cryptocurrency markets reached new highs as investors continued to pile into Bitcoin (BTC) and alternative coins against a backdrop of rising inflation in the United States.

    According to Coingecko, the cryptocurrency market capitalization — an important indicator of the health of the digital asset class — reached a high of $3.11 trillion. Over the last two weeks, the asset class has increased by a total of 20%.

    During the morning session, Bitcoin’s price surged above $69,000, setting a new all-time high. Ether (ETH) also reached new highs, peaking at around $4,870.

    One of my biggest misses is not buying enough #Bitcoin – Peter Thiel— Bitcoin Archive (@BTC_Archive) November 10, 2021

    Bitcoin has attracted bids in part due to its perceived status as a hedge against inflation and currency depreciation, with proponents claiming that BTC is the best “hard money” alternative to fiat currencies. Bitcoin has outperformed gold, the most widely accepted inflation hedge, by a wide margin year to date, gaining more than 130 percent to gold’s 4 percent decline.

    6.2% inflation. And that’s the number they are telling you!1.48% for the 10 YR treasuryThat’s a -4.72% real yield.Wake-up!!!! #Bitcoin https://t.co/xSYUeC6YAw— Preston Pysh (@PrestonPysh) November 10, 2021

    Concerns about inflation were high on Wednesday after the Labor Department reported yet another significant increase in consumer prices. The consumer price index in the United States, a broad measure of inflation, rose 6.2 percent year on year in October, the highest rate since 1990. Core inflation, which excludes volatile goods such as food and energy, increased by 4.6 percent, the highest annual increase since 1991.

    With inflation far exceeding the Federal Reserve’s target of around 2%, calls to end the central bank’s stimulus programs have become increasingly loud in recent months. The Federal Open Market Committee announced last week that it would begin reducing its monthly bond purchases in mid-November, but that it would leave interest rates at record lows indefinitely because high inflation would be “transitory.”

    So basically he’s saying that elevated prices are here to stay, but don’t worry, they won’t rise too much from these levels in the future. https://t.co/qcuurGhxC8— Sam Bourgi (@forgeforth_) July 29, 2021

    Interestingly, Fed Chair Jerome Powell appears to have changed his definition of “transitory” inflation to mean that higher prices are here to stay and that future price increases will be less dramatic than the recent gains.

    To be sure, the Fed’s preferred inflation measure, the core personal consumption expenditure index, is significantly lower than the headline CPI figure. Over the last four months of reporting, ending in September, core PCE has averaged 3.6 percent annually.

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