Waynonator2.ZiL
Waynonator2.ZiL 3 minutes reading from Bitcoin

Bitcoin as Inflation Hedge: The 'Inflation Hedge' Theory

1/ The "Bitcoin as Inflation Hedge" theory. You may have heard that BTC is inversely correlated to the DXY or US Dollar index. For example, the 1st image shows the DXY with a low in 2021, and a parabolic high in 2022 (now).

2/ Compare this against the BTC chart with a high in roughly the same spot in 2021, then an impulsive low in 2022 (now). If you work your way back to the left, you'll notice this correlation continues. DXY has a high, BTC has a low

3/ So in theory, Bitcoin gains value or dominance over the US Dollar, as the dollar drops in value.

So if we take the Turkish Lira / USD for example, illustrating the Lira collapsing in value. If you bought BTC with your Lira back in 2014, 2017, or 2020....

4/ ...How much Lira would your sats buy you today? Unfortunately the charts only go back to 2020, but if you bought 1 BTC in Jan 2020 for 41k Lira, today it will buy you 385k Lira (845%⬆️).

Why? Because the value of the Lira has dropped substantially.

5/ So if it cost 10 Lira for a loaf of Turkish bread in 2020, but due to the currency collapse that same loaf of bread now costs 8,450 Lira, you're effectively still paying 10 Lira because your BTC is worth 845% more Lira today.

6/ So if your local currency every goes down the pooper... your Bitcoin is gonna be SUPER (awesome) and ensure that the dollars you earn today, will still buy you the same amount of stuff as it did when you turned you dollars in BTC

7/ I'm no expert, but this is how I understand what all the Maxi's are saying about Bitcoin hedging against inflation, and potentially even hyper inflation. The more your local currency tanks, your BTC buys am equally greater amount of that currency

This post is based on this twitter thread.

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