After Bitcoin broke the $20.000 mark on December 16th 2020, community exuberance kicked in. Everyone, from exchange owners to self-entitled plebs, started talking about the new all-time high.
However, we shouldn’t celebrate just yet. Uncle Sam has taken care of the almighty USD to such an extent that $21.300 is the new $20.000. Wait, what?
Since Bitcoin’s previous ATH in 2017, the US dollar has had an inflation rate of 6.55%. Which means that anyone who bought at the top three years ago still doesn’t have the same purchasing power. It will take until BTC hits $21.300 until we can actually say that we are seeing profits.
The Federal Reserve’s goal is to have a steady inflation rate of 2%. But in 2020, the money printer has gone BRRR and it’s likely that the Cantillon effect will show its consequences in the coming months and years. So it’s likely that the reported 6.55% inflation rate between 2017 and 2020 is actually greater. Only time will tell.
The bottom line is that we don’t have a real Bitcoin all-time high until the price hits the $21.300 mark. Don’t let yourself get confused by previous market valuation – especially when we’re referring to inflationary fiat.
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