Costs up, but bitcoin not keeping up

Bitcoin, long touted by crypto enthusiasts as a hedge against inflation, has continued to fall in recent weeks even as new data has shown costs are soaring.

On Tuesday, after the Labor Department announced that its Consumer Price Index jumped at its fastest pace in 13 years, bitcoin remained flat and tumbled steadily throughout the morning and afternoon.

Even on Wednesday, after several major players on Wall Street voiced concern that inflation won’t be a temporary blip, bitcoin remained at almost the same level as before the CPI announcement, trading at around $32,800 per coin.

The recent wave of hot inflation data goes back to March, when the CPI clocked in at 2.6 percent from a year earlier. In April, that figure rose to 4.2 percent, then 5.0 percent and 5.4 percent in May and June.

Briefly in March, bitcoin appeared to be rising along with the CPI numbers, strengthening the argument that it protects holders from a weakening US dollar. The crypto peaked in midApril at more than $62,000 per coin.

But then, as inflation concerns mounted, bitcoin reversed course, halving its price just as Americans’ purchasing power was declining rapidly, which is when many predicted bitcoin would be most valuable.

“Bitcoin isn’t behaving like an inflation hedge anymore and will continue to remain heavy over expectations over higher yields,” Ed Moya, senior equity analyst at foreign exchange firm Oanda, said Tuesday in a note to clients.

David Morris, a columnist at CoinDesk, argued that now could be a great time to buy bitcoin.

“If you’re losing faith in the Fed (or didn’t have much to begin with), there’s increasingly strong empirical evidence that bitcoin should be on your shopping list,” he wrote.