Visualizing Inflation CPI Data Vs The Price of Bitcoin: Inflation Hedge?

Inflation Changes vs Price of Bitcoin

We have graphically overlaid the releases of CPI (Consumer Price Index) from the Bureau of Labor and Statistics (BLS) against the price of Bitcoin over the last 2 years. For some time now, the narrative around Bitcoin has been that "Buying Bitcoin" is akin to an inflation hedge --> In periods of increasing inflation, the price of Bitcoin should respond positively to higher prices as it implies the value of the USD is decreasing over time (via that inflation).

Our Observations

Bitcoin price depreciated (fell) on days following the release of CPI starting in November 2021. This pattern continued fairly consistently and occurred on every monthly release through July 2022 as CPI y/o/y readings climbed from 6.2% to 9.1%. In July though, the reaction in price was bullish at the near term lows. Is the Bitcoin cryptocurrency market implying that CPI may have peaked over the short term? Time will only tell. We will keep the chart updating and also update CPI as releases go on.

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