Unintentionally disclosing that Bitcoin (BTC) is outpacing the U.S. dollar in containing inflation is the St. Louis Federal Reserve. The St. Louis Fed contrasts purchasing eggs with BTC compared to USD, with unexpected outcomes, in a blog article that was first published in June 2022 and has since been modified. Since January 2021, the anonymous author calculated the cost of a dozen eggs in USD, BTC, and satoshis. The graphs demonstrate that the amount of sats needed to buy the same dozen eggs has declined more than the equivalent USD since reaching a peak in both currencies in December 2022. As of August 2023, the latest month for which Fed data is available, BTC hodlers needed 70% less BTC for the purchase compared to 58% less USD.
Since the beginning of 2021, the price of eggs has increased for both currencies, with a 39% increase for USD and a 73% increase for BTC. The arbitrary period comparison, however, is still not very useful. The U.S. Consumer Price Index (CPI) year-over-year growth was less than the Fed’s own 2% target at the time, but BTC/USD traded at about the same levels as it does now. Since the latter is no longer relevant, only a longer-term overview offers a meaningful analysis of Bitcoin’s performance. Eggs cost a tiny fraction of what they did in 2019, the final year before Bitcoin’s halving. The average price in mid-2019 was barely above $1.20 per dozen, or 40% less, showing that there have been significant price rises in terms of dollars.
As previously said, as the U.S. dollar index (DXY) soars to nearly one-year highs, attention is turning to the dollar this month. Analysts contend that while the U.S. economy is in trouble on the surface, foreign governments may take steps to address the imbalance as their currencies suffer. The likelihood of a recession in 2024 is rising, with even the Fed’s own data placing the likelihood at about 60% in September. At the same time, bond rates are surging in a phenomenon known as “bear steepening.”