Alex Thorn, head of research at Galaxy, recently stated that the Bitcoin price adjusted for inflation never exceeded 100,000 dollars. Despite the nominal all-time high recorded in October, the real value of the currency remained below that milestone. This revelation comes after analyzing the impact of the Consumer Price Index on purchasing power.
Thorn explained that the peak price stood at 99,848 dollars when using constant 2020 dollars. This analysis considers the fall in purchasing power reflected in official spending reports. Additionally, data suggests that the strength of the dollar has decreased drastically over the last five years. Therefore, the six-figure milestone remains a pending goal in real economic terms.
On the other hand, the U.S. Bureau of Labor Statistics reported a significant increase in annual inflation. This situation has caused the US dollar to lose approximately 20% of its original value. Likewise, investors must consider the real value versus price nominal market today. In this way, the perception of wealth in the cryptocurrencies sector could be slightly distorted.
The phenomenon of the dollar’s loss of value against digital assets
Currently, the cost of goods is 1.25 times higher than in the year 2020. Therefore, a current dollar only allows buying eighty percent of what it previously acquired. Since fiat currency is losing strength, Bitcoin tries to act as a financial haven against devaluation. However, the psychological barrier of 100,000 dollars has not yet been crossed under this specific metric.
It is also relevant to note that inflation in the United States reached peaks above 9% recently. Although rates have come down, the figure remains above the target set by the Federal Reserve. So this environment has driven new investment strategies to protect capital. Many traders now prefer scarce assets that do not depend directly on central bank decisions.
Is Bitcoin the ultimate refuge against the devaluation of fiat currency?
However, the U.S. Dollar Index has shown an acceleration in its downward trend this year. With a drop of eleven percent since January, the indicator reached worrying minimum levels. Therefore, the weakness of the greenback encourages interest in assets with intrinsic value. The market desperately seeks alternatives that manage to overcome the constant loss of purchasing power of currencies.
Finally, the concept of debasement trade has become fundamental for financial traders today. Investors seek assets that overcome the loss of power of traditional currencies. Therefore, the future of the market will depend on how digital scarcity is balanced. The path to a six-figure real value will require much more aggressive nominal growth in the future.
