Andriy Onufriyenko
- Bitcoin notched an all-time high minutes after US inflation data showed prices are surging at the fastest rate in 30 years.
- Bitcoin rose to an intraday high of $69,000, reflecting a 4.6% gain from the time CPI data was released.
- "I have never been on board with the suggestion that bitcoin is an inflation hedge but it's clear today that the narrative is sticking," Craig Erlam of Oanda said.
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Bitcoin notched a new all-time high on Wednesday moments after US inflation data showed prices are surging at the fastest rate in 30 years.
The price of the coin rose to an intraday high of $69,000 at 9:15 a.m. ET Wednesday based on Coinbase data, reflecting a 4.6% gain from 8:30 a.m. ET, the time the Consumer Price Index was released. Bitcoin was trading at $65,951 before the data was published.
Bitcoin pared those gains, and was trading 1.46% higher to $68,393 as of 10:30 a.m. ET.
The fresh CPI data, which showed price growth rising at a quickened pace in October, stoked concerns that inflation would be an issue well into 2022. Bitcoin, often touted as a hedge against rising prices due to its fixed supply of 21 million, rallied in response.
Bitcoin bulls have long said that the token cannot be devalued by any government institution due to its decentralized nature and the inability to mint more of it.
The CPI - a key measure of nationwide inflation - gained 6.2% on a year-over-year basis, the fastest rate of annual inflation since 1990. CPI rose 0.9% in October, higher than the 0.6% estimated by economists at Bloomberg.
Bitcoin did not always react to inflation by surging in price, though. In July, bitcoin fell after a strong inflation reading. And in May, bitcoin fell 7% on a day when CPI data showed prices rising at their fastest rate since 2008.
"I have never been on board with the suggestion that bitcoin is an inflation hedge but it's clear today that the narrative is sticking," Craig Erlam, senior market analyst at foreign exchange firm Oanda, said in a note. "And if the narrative has indeed stuck, this could bode well in the near term as the inflation data may get worse before it gets better."
Other cryptocurrencies are also seeing record highs, pushing the market capitalization of the entire crypto market above $3 trillion for the first time this week.
Gold, another inflation hedge, edged higher by as much as 1.91% to $1,852.65 per ounce on Wednesday.