Bitcoin offers hope and financial security for traders, gaining 800% value in the past 4 years. Contrarily, the USD, the haven, lost 25% value in the same period.
A recent interview on CNBC’s Squawk Box touched on the topic in depth. Since the dollar has lost 25% value in the past 4 years, investors are looking for better financial alternatives.
As the world’s biggest cryptocurrency, BTC offers traders appealing benefits. The crypto has gained 800% value in a few years and packs the potential to surge even more. The impressive market surge has attracted a new wave of investors trying to counter the effects of inflation.
With a capped supply of 21 million, Bitcoin has an added advantage of scarcity. Unlike fiat currencies and even most cryptocurrencies, BTC has a limited supply. This scarcity makes Bitcoin less susceptible to rising inflation.
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Moreover, Bitcoin conducts a halving process every four years to cut off its miner rewards by 50%. The event reduces the rate at which new BTC are made available. This adds to the capped supply of Bitcoin, making it even more scarce.
With Bitcoin ready to conduct its 4th halving in April 2024, the crypto is emerging as a viable investment tool for traders. However, it is worth noting that BTC has risks associated with it.
Unlike USD, BTC is highly volatile and can experience drastic price swings in a matter of hours. The volatility, added to a lack of regulatory authorities, makes BTC risky for traders. Above all, past performance is not a guarantee of future returns.
Investors can leverage Bitcoin as a viable inflation hedge by trading smart. Strategies, such as dollar-cost averaging, can mitigate the risks involved with BTC. Moreover, investors can limit their investments in Bitcoin to limit losses.
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One thing is for sure: BTC’s disruptive nature will continue to challenge the financial landscape. With inflation becoming a massive concern for investors, Bitcoin will emerge as a powerful alternative, sparkling intense exploration and discussion.
