Key Insights:
Elon Musk replied to Michael Saylor’s inflation comment, saying he won’t sell his crypto.
Last month’s inflation rate broke a 40-year old record after rising by 7.9%
Bitcoin is being treated as Gold by Elon, given his statement.
In a Twitter conversation with the CEO and Co-Founder of MicroStrategy, Michael Saylor, Elon Musk stated that he still owns and will not be selling his Dogecoin, Bitcoin, or Ethereum.
The comment came after Saylor discussed his thoughts on the rising inflation rate over the next couple of years.
No to USD, Yes to Dogecoin
Replying to the aforementioned question by Elon, Saylor stated,
“USD consumer inflation will continue near all time highs, and asset inflation will run at double the rate of consumer inflation. Weaker currencies will collapse, and the flight of capital from cash, debt, & value stocks to scarce property like Bitcoin will intensify.”
Since Michael is known to be a Bitcoin enthusiast, it’s not surprising that his first thought following the collapse of fiat currency is crypto. His company MicroStrategy is famous for being the biggest public holder of Bitcoin with 125,051 BTC (worth $4.8 billion) in its treasury.
But as for Elon Musk, his statement of not selling his Bitcoin holding is surprising since last year, his company Tesla stopped accepting Bitcoin as payment which resulted in one of the biggest crashes of 2021.
But the thought of HODLing comes as a solution to a much bigger problem than personal preferences.
Inflation vs. Investment
The rising inflation has become a cause of concern for not just Americans but people around the world as it affects the markets around the world.
Until last year the highest rise inflation witnessed was 6.8%, but the previous two months broke that record consecutively. The inflation rate rose by 7.5% in January, followed by February, registering 7.9%.
This is the highest spike witnessed in 40 years, since January 1982. Thus as once Gold was considered a preferable investment as an inflation hedge, it is now passing on the baton to crypto in the eyes of Saylor and Musk.
Despite the volatility of the asset, Bitcoin is still considered a store-of-value owing to the same reason as Gold’s appeal – Scarcity and popularity. The only difference is one is more scarce than the other.
As of September 2021, the total Gold historically estimated to have been extracted is over 201k tonnes, and more remains in underground reserves. This means that there is no existing cap on Gold.
Whereas Bitcoin is limited to 21 million BTC, which will never change, and thus its scarcity will never change either.
But at the end of the day, its value comes from demand, and as long as people want a Bitcoin, its prices will remain as high as they are. If not, it could lose its value and fail as an inflation hedge.
As of today, Bitcoin is trading at $39,056, Ethereum is trading at $2,585, and Elon’s favorite Dogecoin was up by almost 10% at its high today but is currently trading around $0.1145.
This article was originally posted on FX Empire
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Source: https://finance.yahoo.com/news/dogecoin-jumps-10-elon-musk-155654182.html