Bitcoin
The bitcoin price has dropped to around $20,000 per bitcoin, down from a peak of almost $70,000, while the ethereum price has plummeted to $1,500 per ether, crashing from a high of almost $5,000. Crypto prices have slumped along with stock markets this year as the Federal Reserve wages war against persistently high inflation—though some think that could be about to change.
Now, the chief executive of major crypto exchange Coinbase, Brian Armstrong, has admitted he "overestimated" bitcoin's potential as an inflation hedge, conceding it "looks like we’re a little too early."
It's in a brutal bear market that you need up-to-date information the most! Sign up now for the free CryptoCodex—A daily newsletter for traders, investors and the crypto-curious that will keep you ahead of the market
The bitcoin price has slid over the last year, losing around 70% of its value and dragging ethereum ... [+]
"Frankly, I’ll admit, I overestimated the chances that bitcoin would be this inflation hedge in this macro environment," Armstrong said, speaking on Coinbase's in-house podcast alongside crypto influencer Anthony 'Pomp' Pompliano. "I thought it might actually draw more attention to bitcoin in this kind of environment, but it looks like we’re a little too early."
Bitcoin, created as a digital alternative to cash, has developed a reputation as an inflation hedge in recent years, with investors betting it will win market share from gold.
Ahead of inflation's surge over the last two years, famed investor Paul Tudor Jones named bitcoin as the "fastest horse to beat inflation" in May 2020, becoming one of the first big-name investors to bet on bitcoin.
"Typically in down macro environments, we see there’s a flight to safety," Armstong said. "In the traditional economy, that was always gold, commodities, things like that. But I think what we’ve realized in this downturn is that the crypto economy is just not a significant enough percentage of the global economy, the broader economy yet, to be actually treated as that digital gold in the sense that people do a flight to safety towards bitcoin."
The crypto market, of which bitcoin makes up around 40%, ballooned to $3 trillion late last year after the Federal Reserve and other central banks pumped unprecedented amounts of stimulus into the system to help the economy weather Covid-induced lockdowns.
Coinbase, which made its Nasdaq debut in April 2021 when the bitcoin price was trading near its all-time highs, has seen its stock crash along with the price of bitcoin, ethereum and other major cryptocurrencies. Coinbase stock is currently trading 80% down from its list price.
Sign up now for CryptoCodex—A free, daily newsletter for the crypto-curious
The bitcoin price has been on a steep downward curve over the last year, mirrored by ethereum and ... [+]
However, many in the bitcoin and crypto community remain upbeat about bitcoin's long-term prospects despite the recent downturn.
"Bitcoin's steadiness and ability to maintain upward momentum amid volatile market conditions are arguably more of a boon for the leading cryptocurrency than would-be drastic price movements," Matt Senter, the chief technology officer at bitcoin rewards app Lolli, said in emailed comments, pointing to the bitcoin price's performance compared to stock markets over the last few months.
"Bitcoin’s stability suggests its future widespread use as a secure, anti-inflationary global currency, particularly compared to the weak performance of many fiat currencies plagued by inflation. Moreover, in uncertain market conditions, investors are looking to store their wealth in relatively stable, secure investments like bitcoin is showing itself to be."
