Bitcoin inflation has fallen from 50% in 2011 before the halving to 4% in 2020 and is now at 1.7%, well below the US Federal Reserve’s 2% currency inflation target. is below
The rate shows Bitcoin’s rapid and mainstream adoption, but digital currency fundamentals remain immune to negative GDP growth in 2022, reconsidering 2% inflation target There is pressure on the Federal Reserve to do so.
According to reports, the US Federal Reserve should reconsider its 2% inflation target given the cost-benefit of increased rate hikes and 4% currency inflation.
Some experts argue that the benefits of a rate hike would lead to higher average nominal interest rates, giving enough room to implement monetary policy and possibly eliminating the risk of a zero lower bound.
Olivier Blanchard: Central banks probably don’t want to redefine their inflation target higher, but if they can get inflation down to 3% in the next year or two, they should be open to it. https://t.co/fZBzgHFusg
— Nick Timiraos (@NickTimiraos) November 29, 2022
Despite Bitcoin’s susceptibility to macro announcements and inflationary data, blockchain proponents are skeptical of the technology, as evidenced by Bitcoin’s solid fundamentals in the wake of macro data failures. claims it will help curb inflation and solve the world’s financial problems. Satoshi Nakamoto designed BTC’s currency inflation rate at a fixed rate determined by the coin’s rising circulation up to a cap of 21 million.
Bitcoin’s unique deflationary feature was introduced to control supply and price. However, the coin faced significant backlash from some in the fintech community who assumed Bitcoin’s high volatility rate would negatively impact users.
Despite criticism, volatility has played a key role in the success of Bitcoin and other altcoins. Interestingly, analysts argue that Bitcoin needs to maintain a certain level of stability in order to remain the best performing global currency.
On the other hand, unlike national currencies like the US dollar, which can adjust for inflation, Bitcoin’s inflation rate is predictable and cannot be controlled by a centralized entity.