Deep Dive: Why bitcoin is not an 'inflation hedge'

Correlates with risk assets

Alice Liu, senior associate in cryptocurrency investments research at WisdomTree, dives into alternatives

2022 is a challenging year, even for crypto. The crypto market started the year with price turbulence amid the US Federal Reserve raising interest rates, high inflation, and the equity market backdrop. The total crypto market cap briefly reached an all-time-high at $3trn in early November 2021 and has since dropped to $1.9trn, with bitcoin trading at $42,248 (-11.6%YTD) and ethereum at $2,889 (-23.6%YTD). This gives us the opportunity to explore the macroeconomic drivers investors should consider when approaching this asset class, in particular, under high inflation. 'Grave and mounting ...