Significant Inflation Resistance? Bitcoin Outperforms Most Fiat Currencies Over the Past Two Years

An anonymous analyst, DriftwoodPalace, on Twitter analyzed the exchange rate of Bitcoin against various fiat currencies over different time periods and found that holding Bitcoin since 2018 would have nearly doubled your money compared to keeping it in a bank account, regardless of the currency used for calculation (Bitcoin against TWD has increased by approximately 81.9%).

Bitcoin Outperforms Most Currencies

https://twitter.com/DriftwoodPalace/status/1296056761460371456

According to data released by DriftwoodPalace, Bitcoin has risen by 50% to 128% against global fiat currencies from the beginning of the year until August 18. Compared to currencies with high inflation rates, Bitcoin has shown significantly better performance. For example, Bitcoin has risen by 128.4% against the Brazilian Real and 103.5% against the Argentine Peso, respectively. In comparison to global reserve currencies like the US Dollar and Euro, Bitcoin still retains a 56% to 69% increase, with an approximately 63% rise against the New Taiwan Dollar.

When DriftwoodPalace extended the timeframe further, from August 19, 2018, to August 18, 2020, it was found that Bitcoin continued to rise against global currencies, with the increase further expanding.

https://twitter.com/DriftwoodPalace/status/1296057801496768512

"From 73% against the Swiss Franc to 480% against the Sudanese Pound. In other words, holding Bitcoin in most currencies can roughly double your money compared to keeping it in a bank account (Bitcoin has risen by approximately 81.9% against the New Taiwan Dollar)."

Can Bitcoin Hedge against Inflation?

On March 12, 2020, Bitcoin experienced its first financial crisis since its inception. While global financial markets plummeted, Bitcoin, unfortunately, did not act as a hedge, with a nearly 40% drop in a single day, surpassing other commodities or indices, leading to doubts about Bitcoin's ability to withstand financial crises.

However, markets always surprise, and Bitcoin rebounded strongly after the major drop, even reaching a new high for the year. Investors gradually recovered from the shock of the crash, and surprisingly, more and more people began to view Bitcoin as a "safe-haven asset." Renowned Wall Street investor Paul Tudor-Jones stated in a letter to investors in May that Bitcoin is a hedge against "serious inflation." Recently, Nasdaq-listed company MicroStrategy also announced the purchase of $250 million worth of Bitcoin as a hedge against inflation.

As the global market faces an inflation crisis, something most market participants expected to happen, interestingly, despite the major drop on March 12, Bitcoin's performance still outshines most assets. More and more market participants believe that Bitcoin is a hedge against inflation. CoinShares Strategy Chief Meltem Demirors stated:

"So, where does Bitcoin stand in the economic cycle? During economic uncertainty and a weak dollar period, Bitcoin may benefit in the same way as gold."

As more and more people in the market express their views that Bitcoin is a safe-haven asset, the question of "Does Bitcoin serve as a hedge?" has shifted from denial in March to doubt, and the answer may be revealed in the near future. What do you think the answer is?