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by datadata 912 days ago
Inflation is a lagging indicator. Bitcoin gained in 2020 and early 2021 when debasement happened and the supply of money increased. That debasement takes time to show up in price data, and then even longer to show up in headline inflation, which is a 12 month average.

TIPS and i-bonds are limited in their role as a hedge. Sure, you are exactly compensated for inflation on the capital you invest. However, without the ability to have any leverage, you can't actually use this as a hedge against other capital which has exposure to inflation but which couldn't be converted.
1 comments
dragontamer 912 days ago
It sounds like you're trying to tie BTC to the monetary supply. BTC goes up when M2 increases, and possibly goes down when M2 goes down?

So why is BTC going up when M2 is shrinking for the past 18+ months?

https://fred.stlouisfed.org/series/WM2NS

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datadata 912 days ago
Not sure, it is just a correlation not an iron rule and definitely not the only influence. The shrinking here of m2 is much much smaller than the previous increase was as well.
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dragontamer 912 days ago
> it is just a correlation

Correlation of what, to what, and what's the R-value? Across what time frame?

https://en.wikipedia.org/wiki/Correlation

These words normally have _meaning_ ya know. They're not just things you toss out in a meaningless online discussion.

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datadata 911 days ago
There are certainly time frames where change in global m2 money supply and change in bitcoin's price over say 12mo would have a positive R value. That isn't the point I am making. If the amount of money available goes up, then one would expect that the price of other things, all else held equal would also go up. It would be quite strange for bitcoin or any other commodity to behave differently consistently and over a long period.
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dragontamer 911 days ago
> If the amount of money available goes up, then one would expect that the price of other things, all else held equal would also go up

And if the amount of money available goes down for 18 months... then what?

https://fred.stlouisfed.org/series/WM2NS

An "inflation hedge" goes up when inflation is up, and down when inflation is down. But in practice, BTC is closer to down when inflation is up, and up when inflation is down.

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datadata 911 days ago
It isn't a perfect inflation hedge, no one is claiming that. You are cherry picking a single interval where the correlation is negative. If you zoom out, you'll find that the correlation is mostly positive. Past correlation is also not predictive of future results.
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