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Bitcoin Continues to Rack up Gains as Investors Eye Inflation Hedge

CryptocurrencyJun 14, 2021 03:22PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – Bitcoin jumped above $40,000 Monday as the Musk-fueled rally was helped by the backing from some investors who continue to favor bitcoin as a hedge against rapid inflation on worries the Federal Reserve could be too slow to act.

BTC/USD rose 7.47% to $40,146.

“I like Bitcoin as a portfolio diversifier,” Paul Tudor Jones of Tudor Investment Corp. said in an interview with CNBC. "The only thing I know for certain, I want 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities.”

Last week, data showed that U.S. inflation hit its highest rate since 2008. But the Fed continues to suggest the risk of inflation getting out of control is low as the factors boosted prices are temporary.

The Federal Reserve's delivers its monetary policy decision and updated outlook on several data points including inflation, economic growth and the labor market on Wednesday.

If the Fed indicates shrugs off inflation and continues to suggest that it will maintain the status quo on policy, then Jones suggests it could be time to invest heavily in inflation trades.

"If they say, ‘We’re on [the] path, things are good,’ then I would just go all in on the inflation trades,” Jones said. “I’d probably buy commodities, buy crypto, buy gold.”

The call for bitcoin as an inflation hedge comes just a day after Tesla CEO Elon Musk reversed his stance on bitcoin, saying that the company (NASDAQ:TSLA) could accept bitcoin transactions again in the future.

“When there’s confirmation of reasonable (~50 percent) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions,” he said in a tweet on Sunday.

Musk has appeared as both hero and villain in bitcoin's volatile run of 2021 so far. His announcement in February that Tesla had bought $1.5 billion worth of BTC to hold in treasury helped propel the popular crypto toward all-time highs of around $65,000 in April.

BTC topped out soon after, however, as Musk revealed Tesla had sold 10% worth of bitcoin, and then the CEO began to grow increasingly concerned with the energy usage that miners use to mint bitcoin.

The move lower was also exacerbated by a regulatory crackdown in China on crypto trading and mining activity.

Despite the latest move higher in bitcoin, overall sentiment on BTC remains finely poised as investors appear to be in wait-and-see mode, with little movement on crypto exchanges.

Bitcoin Continues to Rack up Gains as Investors Eye Inflation Hedge
 

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Comments (15)
Alan Rice
Alan Rice Jun 14, 2021 6:22PM ET
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Time to place your bets again, Ladies and Gentlemen !!
Country mckinney
Country mckinney Jun 14, 2021 5:32PM ET
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Gold has of late proven to hardly be an inflation hedge...bitcoin as hedge is purely comical unless Investing. com believes us special Ed.
Alan Rice
Alan Rice Jun 14, 2021 5:32PM ET
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aren't you ?
Jan Novy
Jan Novy Jun 14, 2021 4:56PM ET
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FED lies, they certainly know the inflation will be high and it wont be just temporary.
Alan Rice
Alan Rice Jun 14, 2021 4:56PM ET
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Everything is Temporary.
Alan Rice
Alan Rice Jun 14, 2021 4:56PM ET
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Except One ("thing").
Khwarizmi Algebra
Khwarizmi Algebra Jun 14, 2021 4:26PM ET
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Investing.com should stop these non sense articles. Bitcoin has proven that it behaves like growth stocks and not as gold. Period.
Francesco Lucchesi
Francesco Lucchesi Jun 14, 2021 4:17PM ET
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how ridiculous to call it inflation hedge
Richie Berg
Richie Berg Jun 14, 2021 4:12PM ET
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- Inflow addresses are decreasing - Outflow addresses are decreasing How do they know? Are they tracking BC addresses?
Bolanle Balogun
Bolanle Balogun Jun 14, 2021 4:12PM ET
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Yes,it can be tracked and monitored.That is why it is decentralised.Nothing is hidden.
Richie Berg
Richie Berg Jun 14, 2021 4:11PM ET
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Want a hedge against inflation? Buy a grain silo and fill it with grain. You lock in your food cost at today's price.
Elmer Fudd
Elmer Fudd Jun 14, 2021 4:09PM ET
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The irony of using Bitcoin to preserve wealth
parham talebi
parham talebi Jun 14, 2021 4:08PM ET
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elon musk is stealing peoples money in daylight and no one stops him
Albert Williams
Albert Williams Jun 14, 2021 3:49PM ET
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Where would Bitcoin sell if retail investors held a 5% position to go with their 5% gold position?
gary Gould
gary Gould Jun 14, 2021 3:47PM ET
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should be a law against the old pump.and dump
Andrew Allen
Andrew Allen Jun 14, 2021 3:47PM ET
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investors must learn to do risk analysis themselves the easy way or the hard way. If people are foolish enough to give away their money, they don't deserve to get it back
Kevin Avila
Kevin Avila Jun 14, 2021 3:44PM ET
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Lmao!
Joe Shmoe
Joe Shmoe Jun 14, 2021 3:43PM ET
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Bitcoin Continues to Rack up Gains as Investors Find Elon Musk Can Continually Pump Bitcoin At Will; Investors Shrug off lack of control.
Nazad Alam Nazad Alam
Nazad Alam Nazad Alam Jun 14, 2021 3:40PM ET
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nazad alam
Allatra Yiveh
AllatraYiveh Jun 14, 2021 3:39PM ET
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there is no inflation hedge with Bitcoin. The real inflation hedge is gold.
 
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