Bitcoin’s price has almost doubled in the past two months. One of the factors for this was the big publicly traded companies who have bought the cryptocurrency to counter an inflation-induced drop in the value of their fiat money assets.
Demand for the cryptocurrency is now set to increase further, with expectations for US dollar inflation to reach 19-month highs.
The supply-boosting policies of cash and non-cash money undertaken by the Federal Reserve to means the coronavirus-related economic crisis have done much to fuel the rise in inflation, as well as the ongoing devaluation of the dollar.
The Dollar Index, which tracks the currency’s value against major world currencies, is now near the 91.00 mark. A figure last reached in April 2018, as reported by the TradingView.
These factors usually force institutions and investors to look to preserve the value of our assets. The purchasing power of traditional money is decreasing very fast, for example, gold. This year, institutions, and private individuals, including many millionaires and billionaires, have increasingly poured investment in Bitcoin, strengthening its reputation as an inflation hedge.
“What we’re aiming to do is investment banking giant Morgan Stanley foreseeing. The purchasing power of fiat money is debasing rapidly,” Nasdaq-listed MicroStrategy’s chief executive, Michael Saylor, said last month while explaining the reasons for the company’s decision to invest in Bitcoin. Saylor stated that Bitcoin is a better preserver of value asset than gold is.
Many other companies have recognized the potential of Bitcoin over the past few months. This growing trend is set to continue, with investment bank Morgan Stanley predicting a further 10% decline in the dollar rate over the course of 2021.
