What happened
The world's bellwether cryptocurrency Bitcoin (BTC +1.77%) reached a fresh all-time high earlier this week, at one point hitting the $69,000 mark before settling down to just over $64,000 Friday afternoon. When the smoke cleared, Bitcoin had advanced by nearly 7% from the close of business the previous Friday.
So what
Since Bitcoin is the cryptocurrency for many people throughout the globe, there's rarely a single factor pushing it higher or lower. While that dynamic applies over the past week, we can zero in on one concern in particular that gave the digital coin its latest lift -- inflation.
Image source: Getty Images.
Not coincidentally, that leap to $69,000 a pop took place on Wednesday, the morning when the federal government announced that the consumer price index -- the leading indicator of U.S. inflation -- had zoomed 6.2% higher year over year in October. In a world still adjusting to any inflation at all following decades of stable prices, this was a real shock (it was also the highest annual growth rate in more than 30 years).
For many Bitcoin investors, their chosen crypto is a store of value. Like gold, it's considered by a growing number of people to be an asset that can effectively hedge against losses in fiat currency such as that inflating U.S. dollar. Personally, I'm not convinced that this ever-volatile digital coin can be a reliable store of anything, but these days more and more institutional and individual investors clearly feel differently.
Now what
Bitcoin and some of the more reputable altcoins will likely behave like gold, in that they'll enjoy increased demand with greater economic uncertainty. With the latest CPI number it seems that inflation won't go away as quickly as hoped, so such concerns should help support the current lofty levels of Bitcoin in the near term.
