Bitcoin's $100K Milestone: Not Yet Achieved After Considering Inflation, Says Galaxy Research

Bitcoin’s $100K Milestone Still Unreached When Inflation Is Considered: Galaxy Research

Summary: According to Galaxy Research, Bitcoin has not truly reached the $100,000 milestone when factoring in inflation. While the cryptocurrency hit an all-time high of over $126,000 in October, it remains under the six-figure mark in real purchasing power since 2020 has seen significant inflation affecting the value of the US dollar.

Key Takeaways:

Bitcoin has not surpassed $100,000 when adjusted for inflation, as stated by Galaxy Research.
The purchasing power of the dollar has decreased by approximately 20% since 2020, affecting Bitcoin’s real peak.
Ongoing inflation and dollar depreciation support the narrative surrounding asset debasement.

Alex Thorn, the head of research at Galaxy, reported that Bitcoin has never crossed the $100,000 mark when adjusted for inflation based on 2020 dollars, despite its peaks reaching an all-time high of over $126,000 last October. “When you adjust Bitcoin's price for inflation using 2020 dollars, BTC topped at $99,848, never going over the six-figure threshold,” Thorn noted.

Analyzing Bitcoin Prices with Inflation Adjustments

Thorn’s research utilizes the US Consumer Price Index (CPI) to adjust Bitcoin's pricing, which considers inflation through the costs of a standard set of goods and services. This analysis reflects the overall decreasing purchasing power from 2020 until now.

As per data from the US Bureau of Labor Statistics, inflation based on the CPI has climbed 2.7% in the past year as of November. This trend has contributed to a significant decline in the dollar's buying power; since 2020, the dollar has depreciated by about 20%, indicating that current prices are roughly 1.25 times higher than four years ago.

In real terms, a dollar now has only about 80% of its 2020 value. Viewed through this perspective, Bitcoin's recent peak has not yet crossed the critical psychological milestone of $100,000, as shown by Galaxy Research data.

Inflation Impact on Market Dynamics

The inflation scenario continues to shape market narratives significantly. In the summer of 2022, US inflation soared beyond 9% due to the COVID-19 pandemic. Although inflation rates have decreased, they remain above the Federal Reserve's long-term target of 2%.

Concurrently, the US dollar has faced challenges in global markets. The Dollar Currency Index (DXY), which compares the dollar against a selection of major currencies, has dipped by 11% this year, trading at around 97.8 according to TradingView. It hit a three-year low of 96.3 back in September and has generally been on a downward trend since late 2022.

This interplay of persistent inflation alongside the weakening dollar has intensified what traders refer to as the “debasement trade,” in which investors look towards assets they believe will maintain their value as traditional fiat currencies diminish in purchasing power.

Bitcoin's Link to Federal Policy as Inflation Gradually Decreases

Market analyst Linh Tran from XS.com observes that Bitcoin's price movements highlight the market's responsiveness to anticipated changes in monetary policy rather than direct economic data. While inflation in the US has shown signs of easing, the latest consumer price index of 2.7% indicates that the disinflation period is still slow and inconsistent. This sluggish trend compels the Federal Reserve to adopt a cautious approach, hindering rapid shifts towards aggressive easing measures, Tran commented in a note to Cryptonews.com.

Additionally, K33 reported last week that the continuous selling pressure from long-term Bitcoin holders may be nearing its limits after several years of consistent distribution.