The Federal Reserve accidentally stated that Bitcoin (BTC) is better protected against inflation than the US dollar.
in a Blog article First published in June 2022, the St. Louis Fed compared buying eggs with BTC to buying eggs with USD since the update, and the results are still surprising.
Bitcoin vs. USD: ‘Egg Inflation’ Has Nowhere to Go
There are arguably more and better use cases for Bitcoin held by Bitcoin holders than buying eggs, but that is the subject of a dedicated blog post from the Federal Reserve that attempts to prove that Bitcoin’s purchasing power relative to the U.S. dollar has no Competitiveness.
To do this, its anonymous author measured the BTC price (in satoshis) and USD price of 12 eggs since January 2021.
“The price fluctuates a lot, between 2829 and 6086, which is much more volatile than the US dollar price,” the post concluded.
“In addition, you also need to add Bitcoin transaction fees, which have recently been around $2, but can sometimes surge to over $50. Hopefully, if you make purchases with Bitcoin, you will put more eggs in your basket. “
Still, the chart shows that since the peak of both currencies in December 2022, the number of Sat required to buy the same dozen eggs has fallen more than the equivalent USD.
As of August 2023 (the most recent month for which Fed data is available), buying demand from BTC holders has decreased by 70%, while USD has decreased by 58%.
Compared to the beginning of 2021, eggs cost more in both currencies – 39% for USD and 73% for Bitcoin. However, comparisons of arbitrary time frames are still not helpful here.
At the time, BTC/USD was trading at almost the same price as it is now, while the U.S. Consumer Price Index (CPI) rose below the Fed’s own 2% target from the same period last year. Since the latter is now a thing of the past, only a long-term summary can provide real insight into Bitcoin’s performance.
The price of eggs is a fraction of what it was in 2019, the last year before the Bitcoin halving. The “egg inflation” that will emerge in 2023 is just a relative phenomenon in the landscape.
In U.S. dollar terms, prices have risen steadily—for example, the average price in mid-2019 was just over $1.20 per dozen, 40% lower than now.
Recession is looming
As Cointelegraph reported, attention has been focused on the U.S. dollar this month as the U.S. Dollar Index (DXY) surged to near a one-year high.
Related: Bitcoin Bull Run Awaits as US Faces ‘Bear Steep’ – Arthur Hayes
Analysts say foreign countries may take action to correct imbalances as their currencies suffer, but behind the scenes the U.S. economy is showing warning signs.
A recession in 2024 is increasingly likely, even if The Fed’s own data The odds of September are approaching 60%, while bond yields are surging during the so-called “bear steep” period.
This article does not contain investment advice or recommendations. Every investment and trading activity involves risks, and readers should do their own research when making decisions.
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