Bitcoin’s All-Time High: Adjusted for Inflation, It Could Be Closer to $75,000
As Bitcoin continues its upward trajectory, many are wondering when it will reach and surpass its previous all-time high. However, since November 2021, several factors have changed, including the rate of inflation in the United States. To accurately assess the target price for Bitcoin’s all-time high, it’s important to consider inflation adjustments.
The Impact of Inflation
If Bitcoin were to return to its high-water mark of $69,044 per coin, it would be under different market conditions and a higher rate of inflation. According to the U.S. Bureau of Labor Statistics’ Consumer Price Index (CPI) inflation calculator, the price of Bitcoin in November 2021 would be worth closer to $75,000 today.
Bitcoin’s Price Journey
After reaching its all-time high, Bitcoin experienced a significant decline as the crypto bear market took hold. However, inflation continued to rise during this period. Despite this, Bitcoin gradually climbed back up above $30,000 last April and surpassed $40,000 in December.
The Supply-Demand Dynamics
In addition to inflation, another factor that affects Bitcoin’s price is the growth of its supply. Since December 2021, the total supply of Bitcoin has increased by about 3.8 percent. This growth rate is slower than the rate of inflation.
Bitcoin as an Inflation Hedge
Given Bitcoin’s reputation as an inflation hedge, many wonder how it has performed during the current inflationary period in the U.S. This question sparked a debate on Reddit among cryptocurrency enthusiasts.
The Role of Halving
Calculating Bitcoin’s future price also requires considering the upcoming Bitcoin halving, which will reduce the amount of Bitcoin miners receive as a reward. The impact of this milestone on Bitcoin’s price is a subject of intense debate.
Hot Take: Bitcoin’s Price Outlook for 2024
According to David Waugh, an economist and lead analyst at Coinbits, measuring Bitcoin’s exchange rate in dollars should account for inflation adjustments. While comparing nominal all-time highs is common, it’s essential to consider the real value of Bitcoin over time.
Waugh believes that Bitcoin’s price will continue to rise significantly in 2024 due to various factors:
- Massive inflows into spot Bitcoin ETFs
- Bitcoin companies developing layer-2 solutions and consumer-facing products
- Incorporation of Bitcoin into various financial offerings and applications
These developments are expected to drive adoption and create positive price pressure on Bitcoin.
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