Bitcoin (BTC) Not Powerful Against Inflation, Heading to US $ 12,000?is this really going to happen

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 Bitcoin (BTC) Not Powerful Against Inflation, Heading to US $ 12,000?

 12 SEPTEMBER 2022

 Kenneth Rapoza, contributing author for Forbes.com, said Bitcoin (BTC) is unable to fight inflation and is headed for $12,000.

 Bitcoin with a supply limit of 21 million BTC is referred to as a store of value by Goldman Sachs and a protection against inflation.  However, the inflation-ridden US economy caused the crypto market to decline sharply.

 “Bitcoin is not immune to macroeconomic factors.  Factors such as the Federal Reserve's decision on interest rates have an impact on investor sentiment," said Andrei Grachev of DWF Labs.

 He added that market uncertainty causes investors to look for low-risk assets, while BTC is still seen as a new, volatile asset.

 Institutional investors who buy BTC will sell it when the market is down.  Correlation BTC is considered to have a correlation with the technology stock market.

 Bitcoin and Inflation

 In the short term, BTC is correlated to the stock market.  Investors have been selling the S&P 500 index for the past two weeks, and BTC fell sharply in mid-August.  Over the five days leading up to Labor Day in the US, BTC was down 1.1 percent while the S&P 500 was down 2.6 percent.

 Last year, BTC followed the movement of the NASDAQ stock index instead of following inflation-protected assets like gold.

 Abraham Piha, co-founder of Tomi.com, a decentralized cloud computing solution said, “The price of BTC correlated with the stock market means we are still far from Satoshi's vision of decentralization.”

 He added, the crypto market is still dominated by hedge funds on Wall Street with large liquidity.  If BTC succeeds in achieving decentralization, then BTC can become a means of storing value and protecting against inflation.

 Since BTC was created, the world economy has been in an era of low interest rates which has encouraged investors to seek out riskier assets.

 The decline in the price of crypto assets was caused by increased interest rates in order to reduce excessive liquidity in the capital market, reduce inflation and strengthen the US dollar (USD).

 Naeem Aslam from AvaTrade said BTC and USD have strong causality.  When the USD index rises, the price of BTC often weakens.

 He predicts that if the price of BTC continues to decline due to a stronger USD, selling pressure could push BTC towards US$12,000.

 BTC is not old enough to prove a protection against inflation.  Despite the limited supply, the price of BTC is still influenced by investor sentiment.  BTC still has a chance to be accepted in the long term and become more stable.

 “Instead of inflation, BTC is a protection against currency weakness and an alternative to central bank money,” explains Ben Caselin, Hong Kong Head of Research and Strategy at AAX.

 He added, in countries such as Argentina, Turkey, Nigeria which have experienced severe inflation for decades, BTC has proven to be a protection against inflation.