Will coin printing ‚deprive‘ Bitcoin of its historical high?

What is the price Bitcoin has to reach to compensate for the last three years of US dollar inflation?

In 2017, the price of Bitcoin (BTC) almost reached $20,000 before losing more than 80% of its value in a multi-year bear market. Since then the asset has never approached these highs… until today. At the time of writing, the first cryptocurrency is once again just a few percentage points away from its previous record.

Although the $20,000 may soon be celebrated as a psychologically significant milestone, in reality this level will not correspond to its historical high in terms of purchasing power due to inflation.

„If you bought #Bitcoin at the maximum price of December 2017, you won’t fully recover your purchasing power until we reach $21,240,“ podcaster Vald Costea explained in a tweet published Tuesday. Costea used the value of $20,000 as the maximum of Bitcoin, entering the figures and dates into an inflation calculator with the aim of determining the most accurate price.

Owners of US dollars lose on average about 2% of their purchasing power each year due to inflation. Official data indicate rates of 2.13% in 2017, 2.49% in 2018, 1.76% in 2019 and 1.86% in 2020.

The price of Bitcoin’s latest historical high varies depending on the exchange. The Coinbase price index shows that on 16 December 2017 Bitcoin reached a record price of $19,891.99. Using this figure, Bitcoin will have to reach $21,131.02 to hold the same purchasing power as in 2017, according to Officialdata.org’s inflation calculator.

Other historical levels of Bitcoin show an inflationary impact, although not particularly significant: the level of $1,200 in 2013 corresponds to $1,341 in current dollars.

Given the scale of money printing in the US during 2020, however, only the future will tell us if it will have a greater inflationary impact on the US dollar this year than the rate shown below 2%.