What Does The Rising US Inflation Mean for Bitcoin?

Investors and traders are paying closer attention to Bitcoin (BTC) after the latest US inflation report was released on May 12. As consumer prices in the US continue to climb, questions are mounting about what that means for BTC and whether the world’s largest cryptocurrency can hold its ground. This change also creates a new and challenging environment for the broader crypto market, especially as Bitcoin’s price action often responds sharply to shifting macroeconomic conditions.

Bitcoin Holds Ground Amid Rising US Inflation

Data from the US Bureau of Labor Statistics shows the Consumer Price Index (CPI) rose to 3.8% annually this April. This measurement marks the highest inflation level since May 2023. 

Typically, rising inflation forces the Federal Reserve to keep interest rates high. This higher rate makes risk assets like Bitcoin less attractive compared to safer yields from bonds. However, despite the surge in inflation, the price of Bitcoin only dipped about 1-1.5% to around $80,500 before stabilizing at the $81,000 range. The cryptocurrency’s 24-hour price change also remained relatively flat at 0.1%.

The inflation increase came from an energy price shock linked to the ongoing conflict between the US and Iran. This caused monthly inflation to rise by 0.6%, which matched what many economists predicted. The annual numbers also overshot the initial 3.7% market forecasts. Notably, before the military strikes on Iran in late February, the annual inflation rate was much lower, at 2.4%.

In response, the 10-year US Treasury yield climbed more than 4 basis points to 4.459%. Meanwhile, US spot Bitcoin ETFs saw a combined daily outflow of over $233 million on May 12, showing that investors are moving away from BTC.

Despite these headwinds, Bitcoin’s price remained relatively resilient even as demand for BTC ETFs waned. Its market dominance also held steady at the time while it continued to show strong signs of a new price bounce. This suggests that some investors still see Bitcoin as a potential hedge against inflation, even as traditional markets turn away from risk assets. 

Kiyosaki Urges Buying BTC As Inflation Rises

Financial expert and the author of Rich Dad Poor Dad, Robert Kiyosaki, has cautioned investors to hedge against inflation by buying Bitcoin. In an X post on May 14, he gave reasons why inflation could lead to massive losses for investors. Kiyosaki noted that as long as the war in Iran continues, oil prices will keep rising, thereby increasing inflation in the US. Consequently, he said this could cause “fist money” to decline significantly, eroding the purchasing power of ordinary Americans.

Additionally, Kiyosaki warned that the current US debt, which now stands at roughly $34 trillion, is forcing the government to print more money, further fueling inflation. With these compounding crises ongoing, the financial expert urges investors to protect their money, family, and themselves. He advised people to invest in real money, gold, silver, Bitcoin, and Ethereum to increase their purchasing power.