🌎 Bitcoin Outperforms S&P 500 Amid Inflation Hedge Debate

While crypto prices remained relatively flat following the release of the FOMC minutes, U.S. stocks experienced a downward trend due to concerns over potential hawkish decisions driven by inflation worries.

Despite positive consumer price index (CPI) reports from April, Federal Reserve officials are skeptical that the progress in combating inflation justifies cutting interest rates. According to the latest Federal Open Market Committee (FOMC) minutes, price levels have allowed this year’s inflation rates to remain substantially above the Fed’s 2% target.

Although some stakeholders at the policy meeting considered rate hikes, officials like Chair Jerome Powell hinted against tightening economic policies. Federal Reserve Governor Christopher Waller previously mentioned that the central bank would need consecutive months of positive inflation data to adopt a dovish approach and ease interest rates.

Following the FOMC’s decision to maintain a 5.25%-5.5% short-term lending rate, U.S. stocks saw a slight decline. The S&P 500 traded around 0.27% down. However, deVere Group CEO Nigel Green expects the Fed’s outlook to have less impact on investor sentiment in the coming months. Green stated, “We expect the markets’ bull run, which has taken Wall Street’s major indexes to fresh highs in recent weeks, to continue.” He noted a strong earnings season, recovery in China and Europe, and potential rate cuts should the U.S. economy achieve a soft landing.

Flat Crypto Market Not Indicative of Bitcoin Hedge Status

Bitcoin (BTC) as a hedge against inflation has been a key argument within the broader cryptocurrency community. Analytics support this claim, with year-to-date data showing crypto’s biggest token up around 65%. Increased demand has been observed with the introduction of spot Bitcoin ETFs, and analysts suggest that the halving has initiated a supply shock.

In comparison, the S&P 500 is up 11.9% in a bull cycle for U.S. equities. Extending the timeframe back five years reveals an even larger growth gap. Bitcoin has surged 781.3% since 2019, whereas the S&P 500 has seen an 87.7% increase in the same period.

Bitcoin may have spent its first 15 years largely outside the U.S. financial market, but it has established its status as an inflation hedge over the years. This is evidenced by investments from major Wall Street entities like MicroStrategy and BlackRock.