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Crypto is down. Badly. Bitcoin is at its lowest price in 18 months and the resulting headlines are dramatic. And yet, in the face of the crypto crash, not all hope is lost. Despite Bitcoin’s falling value, it remains to be seen just how the wider economic landscape impacts the coin’s long-term adoption.
Why? Because Bitcoin use cases are actually growing under the backdrop of global inflation. Beyond valuation, Bitcoin is finding new utility in this moment of market madness. Crypto’s biggest and oldest coin is showing promise on several fronts – from governments exploring it in international trade to investors searching for a digital store of value. Let’s look at why inflation – and not the crypto market crash – will define Bitcoin for the years to come.
Bitcoin as a store of value
With inflation rising to 8% in the United States, investors are desperate for a store of value – an asset that can maintain its worth over time without depreciating. In the past, gold has been the tried and tested inflation hedge bet. This time around, $10 billion has been pulled from gold funds as investors increasingly turn to a newer alternative: Bitcoin.
And why not? Like gold, Bitcoin is rare and counts a finite supply. Citing Bitcoin’s $700 billion market capitalization, compared to the around $2.6 trillion worth of gold owned as an investment, Goldman Sachs said in January that the cryptocurrency currently has a 20% share of the store of value market.
It’s important to note that further market maturity is required before Bitcoin is fully embraced as a store of value. A mature market counts long-term investors who can afford to weather price drops. Likewise, a mature market like gold relies on common frameworks, metrics and classifications…
