IS CRYPTOCURRENCY HEDGED AGAINST DOLLAR?
This week's new unemployment numbers sent investors the message that it appears the Fed will keep raising interest rates in order to shrink the amount of money in circulation, which caused the Bitcoin market to decline once more. Some individuals think that everything is about to end and that the market is set to recover. There are other indications we might take into consideration; I believe unemployment is a lagging signal. Housing, unemployment, construction, and economic data are all rapidly deteriorating. Everything is continuing declining at all levels, and inflation will continue to decline.
Although we don't know when it will happen, we need prepare for it right away. The graphic provides data daily, hourly, and even every second, whereas the fed only provides one economic report per month. Both the numbers and the unemployment rate will slow down. Contrary to popular belief, cryptocurrency is not hedged against the dollar because changes in Bitcoin activity are expressed in terms of dollars. It is extremely clear that if the value of the dollar increases, the price of bitcoin will decrease.
It has an anti-inflationary effect, and the current inflation is supply-driven. That is not what Bitcoin accomplishes because it debases both gold and fiat money. Having a strong dollar is tremendously deflationary for us. Although it is clear that we are experiencing inflation, the fact that the currency is still rising is preparing us for a deflationary environment. For instance, countries that export the most finished goods to the United States will be able to do so at a lower price due to the strengthening dollar.
It acts as a restraint on inflation, which is now supply-driven. Bitcoin does not act in this manner because it debases both fiat currency and gold. Having a strong currency has a significant deflationary effect. It is evident that we live in an inflationary environment, but because the dollar is still rising, we are preparing for a deflationary one. For instance, if the dollar keeps rising, nations that export the most finished goods will be able to offer their products at a lower price to the United States because of the weakening dollar.
Crypto is telling us that things are changing, thus we should be optimistic. The market isn't moving much right now because it continues rising and falling without making any notable changes. I believe that as cryptocurrencies become more affordable, investors will find them more appealing because they can purchase them at a lower cost.