Part 3/7:
Bitcoin and the Dollar: A Misguided Hedge?
The relationship between Bitcoin and traditional financial instruments such as the US dollar raises questions about its role as an inflation hedge. Historical trends indicate that during periods of rising interest rates and inflation, Bitcoin's value has declined. In contrast, when the Federal Reserve eased rates and inflation fell, Bitcoin’s prices saw an upswing. This pattern illustrates that Bitcoin does not possess the characteristics of a conventional hedge against inflation.
Instead, Bitcoin's correlation with equities indicates that it serves more as an alternative speculative investment for market participants rather than a foolproof safeguard against economic downturns.