Bitcoin aims for $70,000 and beyond, boosted by its role as an inflation hedge

Bitcoin renewed its all-time highs on November 10th, undoubtedly driven by US inflation data. The queen of cryptocurrencies reached $69,000 and pulled the entire market during a day with high volatility, with rises also for Ethereum, which touched $4,860. However, a modest correction is imposed on Thursday and the total capitalization of cryptoassets hovers around $2.82 trillion. Experts warn that the role as a hedge against inflation that Bitcoin plays, will drive purchases in the short term.

"I have never been on board with the suggestion that Bitcoin is an inflation hedge but it's clear today that the narrative is sticking," comments Craig Erlam, analyst at Oanda, adding, "This could bode well in the near term as the inflation data may get worse before it gets better." "The cryptocurrency rallied around 4% in the short time following the US CPI number and just like gold, it's giving very little back," he explains.

"The recent rise is due to younger investors using Bitcoin instead of gold as an inflation hedge," they note from Spreadex.

"It is telling to see the price react so dramatically. Not only is it a sign that the market is extremely averse to inflationary pressure, but that investors are firmly using Bitcoin as a hedge against rising prices," comments Simon Peters, expert cryptoasset analyst at eToro, "It is also an indicator that institutional investors may be engaging in 'buy the news', as this is the type of move we would normally associate with other markets that react strongly to economic news."

"As central banks around the world struggle with inflation, the need to hold anything that is impervious to its value-eroding effects becomes apparent. Bitcoin is fundamentally structured as a deflationary asset with a set limit of coins that can enter circulation. While there is debate about the level of inflationary pressure facing the global economy, investors seem to be voting with their feet and increasing their holdings of cryptocurrencies to protect themselves and their assets," the expert further explains.

Peters wonders "how far this price rise will go." "From an investor's point of view, the key is to understand the intrinsic arguments for investing in cryptoassets. Anyone interested in the market should do thorough research rather than just buying based on price movements," he states.

"The medium and long-term trend could not be more bullish," comments José María Rodríguez, analyst at Bolsamanía. "In fact, this has never been threatened in the slightest. So yes, the $100,000 we have been talking about since the beginning of the year is getting closer and closer. And $100,000 is not a real resistance because it doesn't really have one," he continues. "But sometimes it is true that certain round, psychological numbers can act as momentary resistance," he concludes.