Bitcoin (BTC) beats inflation better than the US dollar, but unintentionally, says the US Federal Reserve.
In the blog post first Released In June 2022 and since its update, the Federal Reserve Bank of St. Louis has compared buying eggs with Bitcoin compared to the dollar – and the results are still astonishing.
BTC/USD: “Egg Inflation” Is Going Nowhere
Bitcoin traders arguably have many better use cases for holding Bitcoin than buying eggs, but that is the subject of a blog post dedicated to the Fed trying to demonstrate the uncompetitive purchasing power of Bitcoin against the dollar.
To do this, its anonymous author measured the price of dozens of eggs in Bitcoin and US dollars since January 2021.
“The price fluctuates slightly between 2829 and 6086 [satoshis]which is much more than what happened for the price of the US dollar.
“Plus, you’ll need to add in Bitcoin transaction fees, which have been around $2 recently, but can go up to over $50 sometimes. Hopefully, if you’re making this purchase with Bitcoin, you’ll put more eggs in your basket.” .
However, the charts show that since the peak was reached in both currencies in December 2022, the number of satoshis required to buy the same dozen eggs has fallen more than their US dollar equivalent.
Bitcoin holders require 70% fewer purchases as of August 2023, the latest month for which Fed data is available, for 58% fewer dollars.
Compared to the beginning of 2021, the cost of eggs is higher for both currencies – 39% versus 73% for the US dollar and Bitcoin, respectively. However, an arbitrary time frame comparison is less useful.
At the time, BTC/USD was trading at roughly the same current levels, while the year-over-year increase in the US Consumer Price Index (CPI) was below the Fed’s 2% target. Since the latter is now a thing of the past, only the long-term summary provides a true view of Bitcoin’s performance.
The price of eggs is a fraction of what it was during the year prior to the recent Bitcoin halving in 2019. The “egg bulge” seen in 2023 is a blip compared to the overall landscape.
In dollar terms, the picture is one of strong price increases – for example, the average in mid-2019 was barely more than $1.20 per ten, or 40% lower than now.
Recession looms large
As Cointelegraph reported, attention is focused on the US currency this month with the US Dollar Index rising to its highest levels in almost a year.
Related: Bitcoin Bull Market Waits as US Faces ‘Bear Slope’ – Arthur Hayes
Analysts point out that measures taken by foreign countries may seek to correct the imbalance as their currencies suffer, while under the hood the US economy shows warning signs.
A recession in 2024 is becoming increasingly likely, even in light of the Fed’s own data situation Odds are approaching 60% in September, while bond yields soar in what is known as a “bear dip.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risks, and readers should conduct their own research when making a decision.