Changpeng CZ Zhao, the founder of Binance and a crypto millionaire, has recommended crypto as a means to combat inflation.
Michael Saylor, a fellow billionaire, stepped in to say that Bitcoin is the ideal inflation hedge.
Billionaires propose ways to fight crypto inflation
In a tweet, the crypto millionaire said that inflation was an insurmountable foe to face. However, when there is crypto to be acquired, there is no need to combat inflation.
You can’t beat inflation. But you won’t have to fight it when you only have crypto. CZ said.
Michael Saylor, the creator of MicroStrategy, the largest institutional investor in Bitcoin, was drawn to the claim. Saylor said that all one had to do to avoid inflation was ride on Bitcoin.
Set your Bitcoin sail and let the winds of inflation carry you, Michael Saylor commented.
If we see inflation persisting at high levels longer than expected [and] we have to raise interest rates more over time, we will, Powell said.
The freshly revealed inflation numbers in the United States have prompted the two crypto billionaires to have a discussion. According to the Bureau of Labor Statistics, inflation in the United States reached a 39-year high in December. Consumer prices increased by 7% year over year in December, according to the report. An increase in the cost of electricity, housing, secondhand automobiles, and food fueled the growth.
The 7% increase is the largest year-over-year increase in US inflation since 1982. While December set a new high for recent inflation, it is not the first month in which worrying inflation numbers were published. Last year, the rate of inflation surpassed 5% for eight months in a row, and it is expected to continue to grow in 2022, according to estimates.
The Federal Reserve has been reacting to rising inflation, albeit it has only lately started referring to the situation as temporary. Fed Chair Jerome Powell recently said before Congress that the central bank will hike interest rates to battle inflation. Powell cautioned that the Fed might raise interest rates three times in 2022 if necessary.
The Federal Reserve first indicated its plans to raise interest rates in the minutes of a December meeting. The paper caused some havoc in the cryptocurrency market and has been blamed for the latest crypto market fall. Bitcoin has dropped from $46,000 to roughly $43,000 since the meeting minutes were disclosed.
Is Bitcoin a safe haven from inflation?
Because of the price volatility that preceded the Fed announcement, some traditional market experts are questioning whether Bitcoin is a solid inflation hedge.
Bitcoin proponents such as Michael Saylor, Bill Miller, and Ray Dalio, on the other hand, do not question Bitcoin’s store of value attributes, as seen by their investing methods. Despite its short-term volatility, Bitcoin has outperformed the market on a long-term basis. This is why a growing number of institutional investors, high-net-worth people, and even retail traders are preferring Bitcoin over fiat currencies.