As Bitcoin climbs higher and higher, crypto watchers are furiously debating when the number one cryptocurrency will meet and surpass its all-time high—but a lot has changed since November 2021.
According to CoinGecko, if the price of Bitcoin returns to its high water mark of $69,044 per coin, it will do so due to various market conditions, including the rate of inflation in the US since then. So is the actual target closer to $75,000?
That's what the US Bureau of Labor Statistics' Consumer Price Index (CPI) inflation calculator says Bitcoin will be worth today in November 2021.
After Bitcoin confirmed those stellar highs, it lost more than half of its value during a series of declines during the beginning of a crypto bear market.A year after hitting an all-time high, Bitcoin's price was $17,586. Even so, inflation has continued at a rate of 4% to 8% per year—Bitcoin gradually rose above $30,000 last April, and above $40,000 in December, to its current level.
Another reason: inflation grew faster than the supply of bitcoins during the same period. In December 2021, the total supply of Bitcoin was 18,915,566. This number increased by 713,707, or about 3.8 percent, to 19,629,263 as of February 2024.
Bitcoin is frequently positioned as an “inflation hedge” investment to protect against a decline in the purchasing power of money—one might wonder how the top crypto has fared during the current US inflation period. A recent re/cryptocurrency post on Reddit sparked a heated debate on the question.
Such calculations should also be considered for the future Halving BitcoinAs the name suggests, it halves the amount of Bitcoin that miners are rewarded with. The impact of this milestone on the future price of BTC is very telling.
With all this in mind, have the goalposts been moved?
No, responded David Waugh, economist and lead analyst at Bitcoin financial services company Coinbits.
“All-time highs are almost always measured in nominal rather than real terms, so saying that Bitcoin's price should be past all-time highs, adjusted for inflation, is comparing apples-to-oranges rather than apples-to-apples. ” Waugh told Decrypt.
According to Wow, it took 2018 to meaningfully measure the value of Bitcoin in terms of dollars.
Even so, Waugh says there's reason to believe bitcoin's price will rise significantly in 2024.
“Spot Bitcoin ETFs are generating significant income, putting positive pressure on prices as issuers buy BTC to fill orders,” Waugh said, noting how BTC allocations are changing traditional ETF portfolios. “This additional source of demand creates a flywheel for Bitcoin adoption as BTC allocations become commonplace in financial markets.”
In addition to EFAs, Waugh continued, Bitcoin companies are building layer-2 solutions for the Bitcoin ecosystem and consumer-facing products that make Bitcoin more valuable and accessible to consumers.
“Watch for more ‘killer applications' in payments, banking and fintech to incorporate bitcoin into their offerings, driving adoption and creating more positive pricing pressure.”
Edited by Ryan Ozawa.
Stay on top of crypto news, get daily updates in your inbox.
