Bitcoin not replacing gold as hedge against inflation; Hillary Clinton’s crypto warning

When the horror US inflation figures dropped this month, bitcoin was flagged as a possible hedge, but that’s looking increasingly unlikely.

Speculation that bitcoin would be used by investors as a hedge instead of gold looks unlikely despite horror US inflation.

The price of bitcoin has trended lower this week, falling from a high of $US62,440 ($A86,398) last Tuesday to $US55,783 ($A77,187) yesterday.

The crypto did claw back some ground today, edging to $US56,795 ($A78,587).

When October’s shocking US inflation figures flashed on November 11 – a 6.2 per cent increase in the cost of living – cryptos surged.

Bitcoin briefly passed the $US69,000 ($A95,000) barrier. Since then, bitcoin has plunged nearly 20 per cent.

That means the inflation-hedge narrative “should come with some very big caveats,” currency strategist at UBS James Malcolm told Business Insider. “It’s not a robust way of thinking about things.”

Bitcoin’s weakness has also been attributed to the strengthening US dollar.

Despite the sell-off, some of the money might be moving from bitcoin to the smaller altcoins.

“Despite a bit of turbulence, this is still technically a bull market,” CEO of Quantum Economics Mati Greenspan told Bloomberg.

“So money coming off the large cap coins can easily find its way into some of the smaller ones.”

Zcash is up for the week, as is Avalanche.

Bitcoin is also up 212 per cent for the year and up 7546 per cent for the past five years.

The global crypto market capitalisation is $US2.46 trillion ($A3.4 trillion). Bitcoin alone is valued at a stunning $US1.075 trillion ($A1.49 trillion).

Hillary Clinton warns bitcoin is ‘undermining the dollar’

However, former US secretary of state Hillary Clinton issued a warning about bitcoin at Bloomberg New Economy Forum in Singapore recently.

She cautioned the crypto could be “undermining the dollar”.

“What looks like a very interesting and somewhat exotic effort to literally mine new coins in order to trade with them has the potential for undermining currencies, for undermining the role of the dollar as the reserve currency, for destabilising nations, perhaps starting with small ones but going much larger,” she said, Forbes reported.

She said nation-states needed to start paying “greater attention to … the rise of cryptocurrency.”

ASIC warns crypto investors are ‘on their own’

Australian Securities and Investments Commission (ASIC) chairman Joe Longo this week also warned people about investing in crypto.

He said consumers were “on their own” because of limited regulatory protections.

The implications for consumers are potentially huge,” he said, the Sydney Morning Herald reported.

“It is almost an article of faith that no one should invest in something they don’t understand.

“Who among us can say they really understand crypto-assets and cryptocurrencies?” Mr Longo told the Financial Review’s super and wealth summit.

He said investors should view crypto with great caution, citing the maxim, “Don’t put all your eggs in one basket.”

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