Is bitcoin still a good hedge against inflation? According to OK Coin CEO Hong Fang, the answer is a resounding “yes.”
Hong Fang: Bitcoin Can Still Fight Inflation
The argument of bitcoin serving as a hedge against inflation has been going on for years. This argument especially took precedence during the early days of COVID. At the time, everyone was losing their jobs left and right and were being forced to stay home. Businesses were closing, and the economy was in a rather fragile state.
As a result, Congress and politicians throughout the country sought to unveil new stimulus measures that would give people a little extra money to live and support their families. These stimulus checks that were handed out ranged from $600 to $1,400.
While it’s always nice to get a little cash here and there, the idea that such small checks were going to do anything was somewhat laughable, and the fact that so many people were going to get access to these checks was scary in that the government was now going to be printing lots more money, meaning inflation was right round the corner.
As a result, many began turning to bitcoin as a way of keeping their wealth stable and strong. For a while, it seemed to work. By the end of 2020, bitcoin came close to $30,000, beating out its old 2017 high, and by the end of 2021, bitcoin was trading for about $60,000.
However, it looks like bitcoin has since taken a nasty stumble. Inflation has gotten worse in the U.S. having reached a 40-year high, and it doesn’t seem like bitcoin can withstand the economic pressure any further. Thus, the argument that bitcoin is a hedge against this sort of thing is being heavily challenged.
But according to Fang, this isn’t necessarily the case. In a recent interview, she commented:
It’s hard to see where it’s going in the short-term, but I still believe it’s a strong inflation hedge, particularly as we see that inflation risk is going on over the last 12 months or so.
She also said that with the economy moving all over the place, the world of crypto is going to experience a little volatility along the way, but that in the end, this is not something to get too worried about. Fang continued with:
It is a market that has a lot of different forces going in different directions, and we’re seeing macro uncertainty in the market, particularly [Jerome] Powell saying that it’s possible to raise the basis points by another 50.
It’s the Best Asset Out There
Overall, she is confident in bitcoin’s abilities and feels it is the strongest asset to invest in. She said:
Mid-term to long-term, I think the bull [market] is fighting it, but there’s a strong force believing the store of value.