This most times are biased based on your location, but when it come to global economy what makes Bitcoin price some times falls along side with the inflation is likely as a result of monetary policies taken by the federal reserve which in turn tightens the whole situation for investors and as such Bitcoin price may not or may fall only for some time (very short period) before it then makes a price correction.

Let's say, it's because after some short period of tight monetary policies (regulations) the Bitcoin price tends to correct itself against the inflation and with investors finding solution around the situations the market will begin to set forward with it's activities and with that little price fall some investors has a taken advantage of it through buying the dips and the demand for Bitcoin increases over time so the price sky rockets for a long period.

Infact as we know Bitcoin is volatile, so after some depreciation what next is appreciation. so soon after the inflation must have cost a little price fall the next thing is price increase and it tends to last for a long time.

Theoretically, Bitcoin goes up when there is inflation and people conceive it as a hedge. However, this is not always the case, at least not in the short term, because there are people who view it as a luxury asset. And when inflation hits the pocket, and these people need money, then the first to withdraw is their luxuries.

That being said, on the long term it has acted as more than a hedge against inflation. Strictly speaking, though, that does not count as evidence of a long-term inflation hedge either. It does have good chances to work, though, I believe.

FED, central banks create inflation when they need to print money to have money flow in economy. Then they 'find' solutions to control inflation, it's a joke.

Bitcoin is inflationary too, you must know this fact first. It is not deflationary like many people believe it is.

Bitcoin will become deflationary after 2140 when all 21 million bitcoins in total supply will be mined all by miners and available in circulation. There are some contributors for its deflationary like people lost their bitcoins like losing private keys, can not spend because of dust UTXOs, lost to scam exchanges and sent to wrong addresses ...

Price goes up because value of Bitcoin goes up with time, with more adoption, more use cases, more utility, more legality.

If I would describe it in my terms, I will say it this way - When Inflation comes up, people find it hard to invest money and most of the times are left with no money as prices of their daily needs increases compared to the previous term, so this kind of affect any asset and it also affects Bitcoin. Less buyers, Less Demand, Supply keeps growing.

When the prices of goods and services increase, wallets are drained and consumers' purchasing power decreases due to this factor. Due to this situation, the value of the currency will decrease.
Bitcoin supply is 21 million, no more and no one can plan to reduce. When inflation rises, Bitcoin also experiences a decline in the short term, but in the long term, Bitcoin is able to survive as a better asset.

The two sources below can be used as references to make things easier.
1. Bitcoin and inflation: Everything you need to know
2. Inflation and Deflation of Price and Money Supply

I appreciate this question and observation, and the answer is not far-fetched at the same time. What I realise is that people overrate Bitcoin, and this is for obvious reasons, the coin has survived well during thick and thin moments over time and it has moved in thousands from where it started. But people forgot that the Bitcoin of 2010 is not the Bitcoin of now, the price is so high now, that there is no way it can effectively hedge inflation as they say. If you buy your Bitcoin today, you might not see it higher than x2 in the next 2 years. But what if inflation is worse than that in your country? The inflation we talk about too depends on the country we are talking about, and like in my country, inflation is "worst" now. To the extent that if there is anything that can be more qualifiable than worst, that is what I would use it for.

Let me give you a clue. In the last 3 years, the price of commodities has grown between 5-8 times what they used to be due to inflation. Can Bitcoin help me to stabilise it even if I bought the coin 3 years ago? That is not possible. If the inflation is more bitting than how the value of Bitcoin appreciates, it will not be able to hedge anything, though it may try, but it could be futile. This can be worse if it is the bearish season of Bitcoin. You could imagine those who bought Bitcoin when it was at $60,000 in the view that it is a hedge against inflation. By now, it would have been worse for them because, the inflation in their country would be bitting, while again, the Bitcoin they invested in which was supposed to be the hedge against the inflation is still losing their money. What a double punishment!

This means that what people mostly say about Bitcoin is not true, they are only overemphasing on the general saying. This is practical.

OP, it was more the Fed interest rate raises that suppress Bitcoin's price than inflation.

First, you need to understand that any short term movements in the price of any asset is purely based on the psychology of market participants. This overrides fundamentals when we're talking short term, but of course fundamentals are the primary driver of long term growth. Hence why Bitcoin has a big crash every four years despite its fundamentals making it obvious that its price is going to be much much higher in the future. The market doesn't have very good long term sight.


Add to that the fact that most people don't even know what Bitcoin is. Even lots of people IN the bitcoin market don't understand that it is hard money. Lots of people just consider it something akin to a high-growth "risky" tech stock, heck sometimes I still see articles refer to Bitcoin as a stock lol. And what do people do with "risky" investments when the Fed raises interest rates? They dump them. Why do they dump them? Because borrowing gets more expensive as interest rates go up, so companies generally do less borrowing, and therefore take on fewer business growth plans while interest rates are high, which means less expected growth in the near to medium term future. Hence why stocks fall when interest rates go up. Of course Bitcoin is not a stock and is not one bit affected by interest rates. But as I already, most people don't understand what Bitcoin is, and in fact they think it is basically a high-growth risky tech stock. So that's how they treat it as an investment, and they dump it on interest rate raises even though those raises have no effect on Bitcoin.


Yes inflation of USD makes Bitcoin more valuable, but the market psychology of the moment is going to override that in the short term. And even more so the response to high inflation - high interest rates - drive Bitcoin's price down because people treat Bitcoin (right now) like something it is not, like a risky tech stock rather than a very non-risky hard currency. Of course long term if inflation stayed high we would indeed see that positive effect on Bitcoin's price. But if we're talking about just a year or two of high inflation (as we saw in real life recently) that's a short term scale, and the inflation wasn't high enough to really affect Bitcoin's price. If it had been hyper inflation then we definitely would have seen the result in a vastly increasing Bitcoin price because then people would be dumping the hyper inflating currency to get into one that isn't - Bitcoin.



Just always remember, asset markets are driven entirely by the psychology of market participants. In the short term it is very reactionary, driven by fear and greed and this overrides fundamentals. In the long term, fundamentals of the asset smooth out the fear and greed of the market and become the primary driver for growth (or collapse or stagnation) of an asset.

you have to understand that the increase or decrease in Bitcoin prices does not depend on inflation, but market demand for it or when there is positive or negative sentiment; these things will affect the price of bitcoin directly. but why do people say that bitcoin is an asset that is resistant to inflation? You can see the history of bitcoin, starting from the year it was first launched until now, the price trend has increased significantly and it has beaten global inflation, which is what makes people say that bitcoin is an asset that is resistant to global inflation.

Oversimplified way is to see what's happened with the US dollar (since it's what Bitcoin's popularly priced). To curb inflation, the US raises interest rates. In the short term, this encourages investors to shore up more wealth in the dollar, high interest rates make it attractive, more so than Bitcoin.

Long term, interest rates either don't hold, or doesn't hold up to inflation.

Let's take a 1 year vs 10-year look. $100 in 2013 but with 5% PA interest rates is $105. So even if something cost 3% more in 2014, it's still a pretty good gain, something not likely with Bitcoin. But over 10 years, inflation probably outstrips interest over the period. Bitcoin, however, performs very well over 10 years -- there's your hedge.

Now use almost any other currency in the global South and you'll see an even wider gap between interest and inflation. Argentina recently put up  interest rates to beyond 100%! Sounds great to double your money in a year, but inflation has overtaken it by many degrees.