Investors and traders are closely monitoring Bitcoin (BTC) following the latest US inflation report released on May 12. With consumer prices continuing to rise, speculation regarding Bitcoin’s ability to maintain its value has intensified. This evolving economic landscape presents challenges for the broader crypto market, particularly since Bitcoin’s price is often highly responsive to macroeconomic shifts.
Bitcoin Holds Ground Amid Rising US Inflation
According to data from the US Bureau of Labor Statistics, the Consumer Price Index (CPI) registered an annual rise of 3.8% in April, marking the highest inflation rate since May 2023.
Normally, such inflationary pressures compel the Federal Reserve to maintain elevated interest rates. Higher rates can make riskier assets like Bitcoin less appealing compared to the safer returns from bonds. Nevertheless, despite the inflation surge, Bitcoin’s price experienced only a slight dip of about 1-1.5%, stabilizing around the $81,000 mark. In fact, the cryptocurrency’s 24-hour price fluctuation remained relatively flat at 0.1%.
This inflation spike was largely attributed to an energy price shock resulting from the ongoing conflict between the US and Iran. Monthly inflation rose by 0.6%, aligning with economists’ predictions, while annual figures exceeded initial forecasts of 3.7%. Prior to the military actions against Iran in late February, inflation was markedly lower at 2.4%.
In response to these developments, the 10-year US Treasury yield increased by over 4 basis points to 4.459%. Simultaneously, there was a significant outflow from US spot Bitcoin ETFs, which saw a combined daily outflow exceeding $233 million on May 12, indicating a shift in investor sentiment away from BTC.
Yet, Bitcoin demonstrated notable resilience despite these challenges. Demand for BTC ETFs may have waned, but Bitcoin’s market dominance remained stable, and there are signs of a potential price rebound. This behavior suggests that some investors still regard Bitcoin as a viable hedge against inflation, even as traditional markets appear to shy away from riskier assets.
Kiyosaki Urges Buying BTC As Inflation Rises
Financial guru Robert Kiyosaki, author of “Rich Dad Poor Dad,” has advised investors to buy Bitcoin as a hedge against inflation. In a post on May 14, he expressed concerns that rising inflation could lead to substantial losses for investors. Kiyosaki warned that as long as the conflict in Iran persists, oil prices will likely continue to rise, further driving inflation in the US. This scenario, he argues, could significantly diminish the purchasing power of ordinary Americans due to the decline of what he terms “fiat money.”
Moreover, Kiyosaki highlighted the current US debt, approximately $34 trillion, as a factor forcing the government to print more currency, exacerbating inflation. In light of these converging crises, he urges investors to safeguard their wealth by investing in tangible assets such as gold, silver, Bitcoin, and Ethereum to enhance their purchasing power.
