Written by: George Prior
Scorching-hot inflation will continue to support Bitcoin prices in the coming months as investors await a crucial statement by the U.S. Federal Reserve on Wednesday, affirms the CEO of one of the world’s largest independent financial advisory organizations.
The comments from Nigel Green of deVere Group, a game-changing financial giant, come amid a flurry of tweets from Elon Musk, the co-founder and CEO of Tesla and the richest person in the world, over the weekend regarding cryptocurrencies.
“As a general principle, for those looking for advice from this thread, it is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high,” Musk said via Twitter as part of a conversation with Bitcoin bull Michael Saylor. “I still own and won't sell my Bitcoin, Ethereum or Doge.”
Nigel Green observes: “The Federal Reserve’s plans for the first interest rate hike since before the pandemic has been well signalled in advance of the official announcement on Wednesday, and it has been priced-in by the markets.
“However, investors will be closely monitoring the U.S. central bank’s statement and analysis for guidance on how it stands on the war in Ukraine and how this could impact the trajectory for other interest rate hikes this year.
“I believe that Fed Chair Jerome Powell will probably concede that growth could be negatively impacted, and already scorching-hot inflation will remain a cause for concern.”
Russia’s attack on Ukraine, and the subsequent sanctions, have triggered a rally in commodities that has further fuelled inflation. Last month’s U.S. consumer price index was up 7.9%, and some experts are now predicting rising petrol prices could send it above 9% this month.
“As inflation continues to run hot in the coming months, the price of Bitcoin will continue to be supported as investors look to protect their purchasing power by moving out of cash and into store of value investments,” says the deVere CEO.
“Bitcoin is regarded as a credible hedge against inflation for three key reasons. First, its scarcity - a limited supply of 21 million means that higher demand will push prices up. Second, its accessibility - as an asset it has value and is accepted by the market. And third, its durability - Bitcoin will continue to attract more demand over time.”
Nigel Green concludes: “The Fed – the world’s most influential central bank – is likely on Wednesday to warn of the continuation of surging prices due in part to Putin’s war in Ukraine.
“This will be bullish for Bitcoin as it will intensify the flight from cash and other assets from investors looking for a reliable inflation shield.”