In the past two years, Bitcoin has performed better than investment instruments such as gold, Nasdaq and S&P 500. This is the position of the founder and Chief Executive Officer (CEO) of MicroStrategy, Michael Saylor. Saylor made the comment in a Twitter post on May 24, where he wrote:
“In the past two years, assets like Gold 7%, Nasdaq 19%, and S&P 29% have all lagged behind the USD monetary inflation rate (M2 money supply is up 36%) while Bitcoin has appreciated 229% during the same period.”
Bitcoin has been impressive in comparison to most investment vehicles. This is despite the fact that the asset is currently experiencing a bear market which has seen it lose a third of its ATH price in 6 months.
Effects of Inflation On BTC Price
Market analysts believe that with high US inflation rate, the effect on the price of BTC will be profound. One of such analysts is Yemson Quiñonez, who believes that the price of the asset will remain around the $30k range since the effects of inflation puts pressure on the funds available to investors.
In his reaction to Saylor’s comment, Quiñonez said,
“Due to inflation Bitcoin price will not rise up in the short term, because there is not more money to waste on cryptocurrencies. Food is more important than Gold, Nasdaq, S&P, Bitcoin and all cryptocurrencies.”
Stability Versus Volatility
Two years is not enough to judge the performance of an asset. Gold may have returned a lower profit, but it has not shown high volatility like BTC. This is why conservative investors have banked on the metal over time. This is the opinion of @MsSpaceKat, who is a Bitcoin enthusiast and a supporter of inclusion. In her contribution, she said that,
“Two years aren’t a long enough time to determine if the asset did well. Yes, Bitcoin did very well in the last two years but it isn’t a guarantee that it will continue to do well in the next two years. It’s a long term investment!”
Inflation Inspired Success
Market Analyst, Twinkle, believes that the performance of BTC wouldn’t have been as impressive over the past two years had M2 money supply not gone up by 36%. According to Twinkle,
“The 229% appreciation mainly due to the 36% rise in M2 and speculation like during the Tulip mania, combined? Why did Bitcoin not rise big time when M2 was not rising?”
Some in the forum wondered why Saylor cherry picked his data. In the past year, BTC has not been spectacular in performance. In their response, Jonas Ferris, the co-founder of MAXFunds said that high inflation actually kicked in last April.
“Why 2 years? High inflation didn’t kick in until April 2021 we had deflation in early 2020 and since 4/1/21 #BTC is DOWN ~50% your bitcoin hedge fund company MSTR down ~70% S&P 500 flat. Gold also crashed in 1980 when rate of inflation headed down as Fed got hawkish”