The U.S. Bureau of Labor Statistics released inflation data for October at 8:30 a.m. EST today. Cryptocurrency Bitcoin (BTC 0.69%) immediately spiked higher and hit an all-time high of nearly $69,000 per coin around 45 minutes later, according to CoinDesk. As of noon, the price of Bitcoin was sitting at $68,700, a 2.9% increase over the previous 24 hours.
According to the Bureau's data, inflation in the U.S. was 6.2% over the past year. When adjusting for food and energy increases, inflation was up just 4.6%. However, a 4.6% increase is the highest inflation has been since 1991. Hitting a 30-year high is particularly discouraging because the past three months had shown relative signs of improvement.
Because inflation hasn't been this big of a problem in 30 years, investors are naturally looking for ways to hedge against inflation now more than ever. Cryptocurrency is viewed by many as a way to hedge, and Bitcoin is the largest cryptocurrency by market capitalization, valued at around $1.3 trillion. Therefore, it's only natural that investors ran to Bitcoin when the inflation numbers came out.
Inflation is a reality most years. The questions that can't be answered here are how high will inflation go and how long will it last. Because these questions remain unanswered, it's hard to predict how inflation might impact the price of Bitcoin going forward. Therefore, if you own or are thinking of buying some, it would be more beneficial to focus on the underlying fundamentals of the Bitcoin blockchain network. For example, it's about to get an upgrade called Taproot that will make transactions more efficient, which could boost long-term adoption. This is something easier to analyze and understand and why investors should spend time focusing on things like this instead of just fretting about inflation.