Long before the coronavirus outbreak occurred in America, the US Federal Reserve resorted to a series of monetary expansion policies. Later in 2020, the central bank reprinted a quarter of all US dollars issued in less than 12 months to help the economy during the epidemic. Although Fed Chairman Jerome Powell and other central bankers have little concern about inflation, a recent study shows that 77% of Americans are concerned about rising inflation in the coming months. So what does this mean for Bitcoin?
Bitcoin soars while the US has been printing a lot of money since last year
In the first week of March, Federal Reserve Governor Jerome Powell gave an interview at a business summit organized by the Wall Street Journal and declared that he was not worried about inflation. Also, although the Central Bank minted large amounts of USD last year and until 2021, other members of the bank also showed little concern about rising inflation.
Atlanta Fed President Raphael Bostic recently said that determining when to raise interest rates will depend on several factors. Bostic stressed that if prices are not stable and volatile, they will not worry if inflation rises above 2% or even 2.4%. In addition, Cleveland Fed President Charles Evans told the public that increased inflation was welcomed and “very low inflation is not good.”
Most Americans fear inflation risk
Meanwhile, the mainstream media is also telling US citizens not to worry too much about inflation. But Americans seem very worried about rising inflation, according to a recent survey by Civicscience. 77% of US residents worry about rising inflation. The Civicscience survey surveyed about 2,600 people residing in the United States, and the survey shows that inflation concerns are higher among the younger generation of Americans.
The biggest concern is in the young: a third of the elderly are afraid
Americans aged 18-24 are “very worried” about inflation, about 50% of 25-34 year olds are also “very worried” and 48% of respondents aged 35-54 are “very worried”. There is a “very worried” group of 37% of those born between the ages of 1946-1964, known as babyboomers. Researchers at Civicscience also noted in the survey that Americans are becoming increasingly sensitive to the idea of inflation.
“People whose working hours and wages have decreased as a result of the pandemic are the most sensitive to the idea of inflation and what it means for the overall cost of living. If it’s hard to get the two sides together even now, imagine how hard it would be once inflation collapsed. ”
Google data also confirms the concern
Financial news agency Zerohedge recently released an indicator showing that inflation fears are at their highest in the past 100 years. Zerohedge stated that a “panic search” was made for the term “inflation”, as Google Trends (GT) data showed a large increase in inflation queries. In the last week of February, inflation searches, according to GT data, show the score of “100”, the highest score given by GT data for the terms in question.
The average Americans aren’t the only ones worried about rising inflation levels. Fed members believe inflation will cool next year, while former Morgan Stanley chief executive Manoj Pradhan believes inflation will really start to boil. Pradhan says he came to this view from data from the Phillips curve, a dataset that measures rising inflation and unemployment statistics.
In terms of products and materials such as food and timber, inflation has already started to rise in 2021, but Pradhan thinks the real flare-up will begin next year.
Why is it important to Bitcoin?
This fear could also create an explosion for safe haven assets such as precious metals and cryptocurrencies. Similar to gold enthusiasts, many cryptocurrency supporters have begun to hold very high belief that “holding dollars is more risky than holding a cryptocurrency”.
The fact that Bitcoin is now seen as a safe haven asset in addition to being similar to gold suggests that there may be an influx of cryptocurrencies and specifically the Bitcoin wing, as inflation can be easily obtained.