The United States inflation rates rose unexpectedly in July with consumer price index jumping by 0.6% from June figures. According to the Labor Department, the rise matched the June numbers at 0.6%.
Notably, the uptick at least twice compared to what many economists had projected. However, inflation remains in check.
The gain in consumer prices like gasoline (5.3%) reflects the rebound in demand for goods and services from the jaws of the coronavirus pandemic. Based on this fact, inflation might be closer than imagined.
It is worth mentioning that the pandemic might lead to economic deflationary depression or hyperinflation.
The US government embarked on an ambitious stimulus program to mitigate the effects of the health crisis with crypto experts arguing that the move can act as a major Bitcoin rally. Analysts still hold the view that the stimulus packages into the economy will act as a boost for inflation.
What does inflation mean for Bitcoin?
In the wake of the coronavirus induced recession, digital assets led by Bitcoin have remained resilient while at the same time attracting interest as a possible hedge against inflation during hard economic times.
If the inflation rises further, Bitcoin will stand to gain considering that the number of institutions joining the digital asset space is increasing. The new strategy will increase the money supply into the Bitcoin market. The cryptocurrency sector will hold the potential of rising in the long run even when the inflation remains low.
In the event the pandemic leads to a deflationary environment, Bitcoin’s potential as a medium of exchange will rise. In normal circumstances, deflation spurs the purchasing power of Bitcoin as a monetary unit. By press time Bitcoin was trading at $11,550.82 after comfortably breaking the $10,000 barrier.