Why Bitcoin Could Be a Big Winner if More Inflation Happens

Core Viewpoint - The article discusses the potential of Bitcoin as a hedge against rising inflation, emphasizing its scarcity and limited supply compared to traditional fiat currencies [1][2]. Group 1: Inflation and Asset Value - Inflation is currently rising faster than desired, prompting investors to seek assets that are less susceptible to dilution, such as real estate or gold [3]. - Bitcoin is positioned as a "hard" asset with a capped supply of 21 million coins, with over 94% already mined, making it less prone to inflationary pressures [4][6]. Group 2: Supply Dynamics - Approximately 3 million to 4 million Bitcoin are considered lost, reducing the tradable supply to around 17 million to 18 million coins, which are increasingly held by long-term investors [6]. - Financial institutions and corporate entities hold over 6 million BTC, accounting for about 28% of the total supply, further tightening the available market supply [7]. Group 3: Demand and Price Movements - If inflation accelerates, increased demand for Bitcoin as a non-fiat store of value could lead to significant price increases due to the limited supply available for sale [8]. Group 4: Comparison with Other Assets - Bitcoin lacks the long historical track record of gold as a reliable store of value, which has proven its ability to preserve purchasing power over centuries [10]. - Despite its volatility, Bitcoin has shown positive returns following inflation surprises, indicating its potential as a partial hedge against inflation [11]. Group 5: Investment Strategy - Bitcoin should be viewed as one component of a diversified inflation-resistant portfolio, alongside more established assets, to mitigate risks associated with its volatility [13].