President Donald Trump tells reporters he loves inflation
Asked if he was concerned about the latest inflation numbers, President Donald Trump told reporters he loves inflation.
- Experts say regular savers shouldn’t jump at tips they see on social media about buying Bitcoin as an inflation hedge.
- The story of Bitcoin as an inflation hedge is based on the concept of a fixed supply of digital tokens. However, experts have issued a number of warnings on social media against such tips.
A spike in inflation in 2026 has reignited the conversation about Bitcoin and other cryptocurrencies being a good hedge against inflation.
The main digital token, Bitcoin, has a fixed supply. This does not apply to US dollars or other government-issued fiat currencies. Naturally, you can find some of these declarations on sites focused on cryptocurrencies.
Digital platform CoinDesk brought up the concept during a short-lived Bitcoin rescue rally in the spring, as inflation was heating up after the war with Iran began on February 28th. The theory was that Bitcoin’s rise in value further fueled the inflation-hedging narrative.
“Not so fast,” says Paolo Pasquariello, a finance professor at the University of Michigan.
“I read on blogs that some people are promoting cryptocurrencies as a hedge to protect against inflation,” Pasquariello said in a phone interview.
“That’s not true. Cryptocurrency is a bubble in itself.”
He sees no evidence that cryptocurrencies offer any protection from inflation, as the value of cryptocurrencies is expected to rise much faster than the U.S. inflation rate.
His recommendation is that regular savers shouldn’t jump on tips on social media to buy Bitcoin as an inflation hedge.
Why do we need an inflation hedge?
The reality is that no one wants to lower their standard of living. Everyone wants to be able to spend their money the same way they always have and be able to buy what they want. But how do you do that when prices are soaring and rising every day?
Naturally, when inflation rises, people start talking more about inflation hedging. It might get a little funky. During the height of inflation in the 1970s and early 1980s, buying art (yes, paintings) became a hot topic.
Admittedly, cryptocurrencies didn’t exist 40-50 years ago, so it’s been a bit difficult for them to have a historical track record as an inflation hedge.
Created in 2009, Bitcoin is a digital currency that is relatively anonymous and can be used to purchase goods and services without the need for a central authority such as a bank or government.
However, Pasqualiello argues that cryptocurrencies have no intrinsic value. While many people use Bitcoin and other cryptocurrencies as a means of payment, they have not yet succeeded in becoming widely popular.
“Do I receive my salary in cryptocurrency? No,” he said. “Would you go shopping at Whole Foods or Trader Joe’s with paid cryptocurrency? No.”
Pasqualiello sees cryptocurrencies as a speculative play for people with extra cash on hand. It’s something that could easily drop in value if the economy plummets and wealthy people start worrying about their pennies again. (I believe that’s true even if you can still find pennies in circulation, as they are regularly in short supply.)
“When the economy gets bad, people stop playing with toy money,” Pasquariello declared.
Of course, cryptocurrencies spark a lot of contentious conversations. We have cliques of likes and dislikes, and not much in between.
Cryptocurrency may still be headed to your 401(k)
The Trump administration has embraced cryptocurrencies in a variety of situations. Last September, I wrote about how many 401(k) investors a day would gain access to cryptocurrencies, private equity, and other alternative investments in workplace retirement savings plans thanks to an executive order signed by President Donald Trump on August 7, 2025.
In his executive order, President Trump blamed “overregulation and encouragement of litigation by opportunistic trial lawyers” for suppressing investment options such as cryptocurrencies in 401(k)s.
On August 14, a few days after the executive order was signed, Bitcoin hit a then-high trading high of $124,457. Much of this rally began in late 2024 on the theory that the second Trump administration would provide a crypto-friendly regulatory environment. Bitcoin reached an all-time high of approximately $126,000 in early October 2025.
Bitcoin will experience a major crash in 2026
Still, 2026 hasn’t been a great year for Bitcoin so far. The largest cryptocurrency was trading at around $62,800 on Thursday, June 18th.
Yes, we’re talking about a 50% drop in value within a year.
Indeed, from the beginning of 2021 during the height of inflation to November 2021, Bitcoin’s value more than doubled, with Bitcoin reaching a then-high of around $69,000. This ride can be seen as a possible reason for this inflation hedging theory.
Inflation subsided for a while, but started heating up in 2026 when the Iran war began. The consumer price index, which covers all urban consumers, rose 0.5% month-on-month in May, after rising 0.6% in April.
Over the past 12 months, the all-item index rose 4.2% before seasonal adjustment. This is the third consecutive year of year-on-year increase since the start of the Iran war in late February.
Chartered financial analyst Sam Hashcho agreed that there is no long-term empirical evidence to solidify cryptocurrencies as an inflation hedge.
“Many people are accepting these stories about Bitcoin without checking the facts,” Hashcho said.
“Anyone who brings this theory to me will just ask to see the evidence,” he said.
This story is based on the concept of a fixed supply of digital tokens. And like gold, he said, it withstood well through the most recent inflation shock a few years ago, the biggest spike in inflation in 40 years.
“But one example alone does not prove that it is the holy grail inflation hedge. A broken clock could also be right,” Hushcho said.
Robert Bilkie, CEO of Sigma Investment Counselors, said there is no evidence to suggest that cryptocurrencies are a good inflation hedge.
“We don’t have enough data to show the correlation with inflation or other asset classes,” Bilkey told the Detroit Free Press, part of the USA TODAY Network. He believes owning common stocks and real estate is now a better inflation hedge.
“Bitcoin Butcher” still believes in inflation hedging theory
But Detroit’s “Bitcoin Butcher” (a nickname used by small business owner and cryptocurrency advocate Ronnie Bedway on social media platforms) said that Bitcoin alone acts as a hedge against future financial inflation because its supply is fixed. We are talking about when more money is chasing the same amount of goods. Or money is being created faster than the ability to produce goods.
“Critics will point to recent price movements and say Bitcoin is failing, going from a high of just over $120,000 last year to just over $60,000 now,” Bedway told the Detroit Free Press.
But Bedway argued that the current inflation is due to a supply shock, namely the rise in oil prices following the Iran war that began in late February. Bedway said high oil prices and their impact on the prices of other goods are now putting pressure on the Fed to keep interest rates high to prevent inflation from getting out of hand.
“This restrictive monetary policy will drain liquidity from financial markets, resulting in riskier assets such as Bitcoin being hit hard in the short term,” Bedway said.
He still sees Bitcoin as a long-term inflation hedge should oil prices return and the US Federal Reserve ease monetary policy in the future.
Current inflation concerns are primarily driven by the oil price spillover expected early this year, Bedway said. The high cost of oil is spilling over everywhere, including the meat industry. Others argue that higher prices will trickle down to the economy in the coming months, even after oil prices have fallen slightly in recent weeks.
All other cryptocurrencies, except perhaps Ethereum, are irrelevant to the idea of inflation hedging, Bedway said.
A low-risk inflation hedge bet
Of course, other experts argued that other less speculative options exist as an inflation hedge.
One less volatile option for some savings is inflation-indexed U.S. savings bonds, which can be purchased online at TreasuryDirect.gov. I-Bonds can be used partly as emergency savings and partly as a conservative holding for investors who want to protect a portion of their portfolio from dramatic stock market declines.
The “I” in I Bonds stands for inflation. The overall interest rate on an I bond may rise or fall every six months after you purchase the bond, based on changes in inflation. The six-month comprehensive interest rate for newly purchased I bonds issued between May 1 and October 31 is 4.26%.
The wild rise in Bitcoin since October 2025 proves that there is still a risk of large amounts of money disappearing quickly when investing in cryptocurrencies.
If the idea of inflation hedging is to protect purchasing power in good times and bad, then I am still not a fan of the cryptocurrency inflation theory.
Contact personal finance columnist Susan Tompol: stompor@freepress.com. follow himr X @tompor.
