Mastercard has partnered with Circle, Paxos, and Nuvei to allow 150 million merchants to accept stablecoin payments. 

Daily top performer — Drift Protocol (DRIFT)

The S&P 500 rose 0.58% for a sixth straight gain as markets await key inflation and GDP data, alongside earnings from Meta and Microsoft. Gold fell 0.60% to $3,323 as a stronger USD and improved risk appetite limited safe-haven demand. Prices remained range-bound, with key levels at $3,260 support and $3,400 resistance. The Coindesk Indices, which tracks the broader crypto market, rose 0.51%, with Bitcoin and Ether up 0.55% and 1.31%, respectively in the past 24 hours. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today's top performer is DRIFT, which surged 28.7% following the introduction of Amplify, Drift's tool for simplified leverage that boosts yields with increased risk.

Drift Protocol (DRIFT), founded in 2021, is a decentralized exchange (DEX) on Solana offering spot trading, perpetuals, and market-making tools. Drift v2 builds on this by improving trading efficiency, security, and user-centric features, incorporating community feedback to enhance the platform. 

 by Drift automates leveraging strategies for higher yields by recursively borrowing against yield-generating assets. It simplifies the process, making leverage accessible with one click. However, risks such as liquidation, changing interest rates, and oracle failures exist. Amplify is designed for users with JLP or SOL LSTs seeking to boost yields with minimal complexity but comes with increased risk.

Check out the latest prices, charts, and data of 

 with Circle, Paxos, and Nuvei to allow 150 million merchants to accept stablecoin payments. The company aims to make it easier for both merchants and consumers to use stablecoins, promoting blockchain technology's mainstream adoption. Additionally, Mastercard has launched a crypto payments card with MetaMask, enabling self-custodied fund transactions with fast processing speeds. Stablecoin market growth is expected to reach $3.7 trillion by 2030.

Yesterday, Bitcoin spot ETFs saw $43.9 million in net outflows, all from non-GBTC funds, while GBTC recorded zero flows.

, a Layer-1 blockchain focused on AI agents and user-owned IP, is offering a limited-time free ticket to its Summit Series for the next 18 hours. Users can also join the Camp Points Program by completing simple tasks to earn points, which may qualify them for a future $CAMP token airdrop. A minimum of 30 points is required to be eligible. Daily check-ins earn bonus points. VPN use may be needed for access.

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Mastercard partners with Circle, Paxos, and Nuvei to enable stablecoin payments for 150 million merchants

Gold's meteoric rise in 2025 is closely tied to broader macroeconomic factors, particularly the performance of the US dollar and global stock markets. 

Gold's meteoric rise in 2025 is closely tied to broader macroeconomic factors, particularly the performance of the US dollar and global stock markets. A weakening dollar, combined with disappointing equity returns, has created a fertile environment for gold to thrive. With gold priced in dollars, any depreciation in the US currency enhances gold's relative value, attracting both domestic and international investors.

Year-to-date, gold has gained 26%, while the S&P 500 has declined by 11%. This inverse relationship underscores gold's role as a traditional 

 during periods of economic uncertainty and market volatility.

Adding to the bullish momentum, inflationary pressures are remaining persistent, further eroding the purchasing power of fiat currencies and boosting gold's appeal as a hedge against currency devaluation.

Geopolitical uncertainty and tariff risks

Trade policies under U.S. president Trump have reignited fears of global tariff wars. The uncertainty surrounding tariffs has prompted investors to seek refuge in gold, considered the "global currency" during times of economic disruption. Concerns about tariffs on key commodities, including gold itself, have added another layer of complexity to market dynamics.

Potential tariffs on gold could mirror the recent surge in copper prices, as supply constraints and increased demand drive costs higher. Exporters and importers, wary of volatile exchange rates, are increasingly opting to hold gold instead of more vulnerable currencies like the Canadian dollar (CAD), Japanese yen (JPY), euro (EUR), Chinese yuan (CNY) and Mexican peso (MXN).

By serving as a neutral reserve asset, gold provides much-needed stability amid shifting trade patterns and geopolitical tensions. As global commerce adapts to new tariff structures, the demand for gold as a "store of value" is likely to intensify.

Interestingly, the ongoing trade war dynamics suggest that for the first time in decades, gold may be emerging as the 

. As U.S. imports become more expensive due to tariffs, exporting countries earn less revenue and, consequently, reduce their investments in US Treasuries. This dynamic has led to selling pressure on Treasuries, weakening their traditional role as a safe-haven asset — and with Treasuries losing their appeal, investors are increasingly parking their capital in gold, reinforcing its unique position during this period of heightened trade tensions.

From a technical standpoint, gold's rally appears robust. The 

 (MACD) indicator remains positive, signaling that bullish momentum is intact. Notably, the 12-day moving average is above the 26-day moving average, confirming that short-term price action is outpacing longer-term trends.

 (RSI) stands at 60, indicating that while gold is nearing overbought territory, momentum hasn’t yet faded. This technical setup suggests that gold could continue its upward trajectory in the near term, especially if macroeconomic and geopolitical factors remain supportive.

The next upside technical target is pegged at $3,500, with analysts projecting a potential move toward $4,000 by year end if current momentum holds.

China's role in supporting gold prices cannot be overstated. Amid a deepening economic slowdown and strict capital controls, Chinese investors are increasingly turning to gold to preserve their wealth. With over 1.4 billion citizens seeking alternatives to a weakening yuan, demand for gold within China has surged.

This trend is reflective of a broader shift in emerging markets, whereby gold is viewed not just as an investment but as a critical safeguard against economic instability and currency depreciation. Intensifying Chinese demand provides an additional tailwind to global gold prices.

While gold commands the spotlight, silver presents an intriguing complementary opportunity. Historically correlated with gold, silver remains significantly below its ATH of $50, which was set in 2011. Given the momentum in precious metals, silver's relative undervaluation offers considerable upside potential for investors seeking diversification.

With industrial demand also supporting silver prices, silver could benefit from both safe-haven inflows and economic recovery scenarios, making it a compelling addition to a diversified precious metals portfolio.

In conclusion, gold's impressive surge to record highs is being driven by a combination of macroeconomic headwinds, geopolitical uncertainty and strong technical indicators. Trade policy risks, the weakening dollar and growing demand from China reinforce gold's role as a premier safe-haven asset.

Because technical momentum remains positive and investor sentiment strong, gold appears well positioned to continue its ascent toward the $3,500 mark by year end. Investors seeking to hedge against economic instability and currency volatility will likely find gold — and potentially silver — to be attractive additions to their portfolios in 2025.

Advanced

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Bybit x FxStreet Report: Gold could reach US$4,000 per ounce by 2025

USD1 is a stablecoin developed by WLFI that’s fully backed by short-term US government treasuries, US dollar deposits and other cash equivalents. Learn more.

, it seems that everyone is getting involved with creating and launching their own 

 these days. As something that is the lifeblood of every crypto ecosystem today, stablecoins are essential for crypto traders because they provide a stable asset for use as a 

 against the high volatility that’s inherent in other crypto assets like 

. This stability allows traders to protect their assets, particularly during market downturns when the value of more volatile cryptocurrencies can decrease rapidly. This is one reason among many why entities like 

 (WLFI) are stepping up to launch their very own USD1 stablecoins. 

Curious as to what makes USD1 different from the rest of the stablecoins? From understanding why WLFI is joining the stablecoin race to digging into what makes USD1 unique, our USD1 stablecoin guide will help you understand the impact of WLFI’s stablecoin efforts in the grand scheme of things.

 is a stablecoin developed by World Liberty Financial that’s fully backed by short-term US government treasuries, US dollar deposits and other cash equivalents. Designed (among other reasons) to provide stability in an otherwise inherently volatile market, USD1 offers users a reliable digital asset that maintains a 1:1 peg with the US dollar. This means that for every USD1 token in circulation, there is an equivalent amount of reserves held securely.

One of USD1’s standout features is its custodial arrangement with BitGo, a leading provider of institutional-grade security for digital assets. With BitGo managing its reserves, USD1 aims to promote transparency and trustworthiness. These are two critical factors for retail traders and beginners entering the crypto space.

Additionally, USD1 is compatible with major blockchain networks, such as Ethereum and Binance Smart Chain (BSC), making it versatile and accessible for a wide range of use cases. Whether you’re looking to trade cryptocurrencies, participate in 

 (DeFi) or make cross-border payments, USD1 provides a seamless solution.

Why is World Liberty Financial launching a stablecoin?

The decision to launch USD1 stems from World Liberty Financial’s vision to empower individuals and institutions with secure and accessible financial tools. Here are some key reasons behind this strategic move.

Addressing the demand for stablecoin alternatives

The crypto market has seen exponential growth in recent years, with stablecoins playing an increasingly prominent role because of their innate stability. Retail traders are seeking alternatives to traditional banking systems that offer faster transactions and lower fees. That's where USD1 comes in, as it caters to this demand by providing a stable digital asset that’s fully backed by short-term US treasuries, US dollar deposits and other cash equivalents. Additionally, USD1 eliminates transaction fees on minting and redemption, making it even more accessible for users in the market for stablecoins.

 face criticism over their lack of transparency regarding reserve management and overall transparency. To combat this, WLFI aims to set a new standard for trustworthiness in the stablecoin industry with transparent backing. Also, by partnering with BitGo and delegating it to hold its reserves, WLFI aims to ensure a high standard of transparency and security for users and institutions alike as USD1 reserves are subject to quarterly independent audits and real-time on-chain verification.

DeFi has revolutionized the way people access financial services, but it relies heavily on stablecoins for liquidity and transactions. USD1’s compatibility with multiple blockchains like Ethereum and BSC ensures seamless integration into DeFi protocols. This multichain approach supports a wide range of use cases, from retail payments to institutional liquidity management and cross-border settlements.

USD1 would operate as a fully-backed stablecoin that maintains its peg to the US dollar through meticulous reserve management and blockchain technology integration. Here’s a deeper look at its inner workings.

As previously mentioned, each USD1 stablecoin is backed by an equivalent amount of reserves held in US dollars or highly liquid US Treasury securities that are held in custody by BitGo. Thanks to this institutional-grade security and transparency designed to verify reserve holdings, users will be inclined to have more confidence in the stability of their assets.

USD1 is designed to function on leading blockchain networks, such as Ethereum and BSC. Its smart contracts have undergone independent security audits, and utilize multi-signature approvals for transactions, ensuring robust operational security. This interoperability allows users to transact across multiple platforms while benefiting from low fees and high-speed transfers.

WLFI prioritizes compliance with global regulations to ensure that USD1 remains a trusted asset for users worldwide. The platform incorporates 

 protocols, making it suitable for both retail and institutional users who require compliance with international financial standards. By adhering to strict guidelines and conducting regular audits, the company minimizes risks associated with regulatory scrutiny.

How will this impact the current crypto landscape?

The introduction of USD1 has significant implications for the broader crypto ecosystem.

USD1 enters a market dominated by established players like 

. By placing an even greater emphasis on transparency, security and compliance, USD1 adds to the ongoing evolution of industry standards. Its approach may encourage further improvements across the stablecoin ecosystem as the market continues to mature.

Empowering retail traders and driving institutional adoption

For retail traders, USD1 effectively offers an accessible way to engage with crypto without worrying about volatility. Its user-friendly design could encourage more individuals to explore digital assets.

On the institutional side of things, USD1’s regulatory-first design and institutional-grade infrastructure are likely to attract greater institutional participation, providing reliable liquidity for trading, settlement and DeFi applications.

USD1’s transparent reserve management and compliance features may set new industry benchmarks, pressuring other stablecoin issuers to adopt similar practices and potentially shaping future regulatory frameworks.

Stablecoins are integral to DeFi protocols as they provide liquidity for lending, borrowing and trading activities. With its compatibility across major blockchains, USD1 could become a preferred choice for DeFi participants seeking reliable assets.

USD1’s stability makes it an ideal tool for cross-border payments and remittances. By eliminating currency conversion fees and delays associated with traditional banking systems, this stablecoin could revolutionize international commerce.

However, USD1’s launch has also raised concerns regarding potential conflicts of interest, regulatory arbitrage and political influence, highlighting the need for ongoing oversight as stablecoins gain prominence. These risks and criticisms extend beyond the typical scrutiny faced by stablecoins, touching on issues of governance, constitutional law, financial stability and the integrity of US political institutions.

Conflicts of interest and political influence

USD1 stands apart from other stablecoins due to its direct association with a sitting or former US president and his family, who reportedly control 60% of World Liberty Financial’s equity. This unprecedented overlap between private financial interests and public regulatory power raises the specter of significant conflicts of interest. Critics argue that a major political figure issuing a stablecoin could shape regulations to benefit their own financial product, or monetize public policy for personal gain. Such actions could ultimately blur the line between state and personal interests and undermine democratic safeguards.

The introduction of USD1 raises concerns about regulatory arbitrage, whereby gaps in regulations could be exploited. Thus, there are understandably fears that political influence could compromise the impartiality of regulatory agencies, undermining oversight. 

Furthermore, if USD1 gains widespread use without strong federal oversight, it could pose a systemic risk to financial stability, potentially opening it to use for political leverage. Questions also persist regarding the transparency and real-time verification of USD1's reserves, despite claims of full backing by US Treasuries managed by BitGo.

Due to the global and open nature of stablecoins, USD1 could potentially be acquired by anyone, including sanctioned individuals or foreign governments, raising concerns about foreign influence. Observers worry that foreign entities might use USD1 to gain favor or leverage over US policy, bypassing traditional safeguards. Additionally, reported investments from controversial figures under investigation are fueling concerns about the potential for illicit funds entering the DeFi system through USD1.

The potential for those controlling USD1 to influence its regulation creates a conflict of interest, opening doors for market manipulation. Access to regulatory levers and inside information could allow them to unfairly advantage USD1, damaging market competition and investor trust. This situation could also set a dangerous precedent, encouraging other political figures to launch similar ventures — and further blurring the lines between public service and private financial gain.

Calls for oversight and legislative action

In response to these multifaceted risks, prominent lawmakers are demanding ethical investigations and the implementation of stronger regulatory frameworks specifically designed to address the challenges posed by “politically connected” stablecoins such as USD1. Ongoing congressional debate surrounding stablecoin legislation highlights the urgent need to establish clear rules to ensure transparency, compliance and the protection of both the financial system and democratic processes as these digital assets become more globally integrated.

World Liberty Financial’s launch of USD1 marks an important milestone in the evolution of stablecoins. By emphasizing trustworthiness, transparency, usability and regulatory compliance, USD1 addresses key concerns faced by retail traders and institutions alike. Whether you’re new to crypto or an experienced trader looking for reliable assets, USD1 offers a secure gateway into the digital economy. As stablecoins continue to play an essential role in driving global crypto adoption, innovations like USD1 pave the way for a more inclusive financial future.

Intermediate

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USD1: World Liberty Financial's solution to stablecoin demand

Explore how Enzyme (MLN) empowers decentralized, tokenized fund creation and management, revolutionizing DeFi investment for all users.

 (DeFi) protocols have been around since 2015, when the 

 (ETH) blockchain was born. For the past decade, DeFi has been a major driving force in the crypto industry. As it often happens, things that worked perfectly in the early years of the DeFi revolution no longer adequately meet the needs of today’s users.

In order to stay competitive and relevant, DeFi protocols need to adapt to the evolving nature of the industry. New features that are quickly becoming must-haves include cross-chain functionality, architectural modularity, 

 (AI) and, importantly, user empowerment. This last point is probably the most important one — DeFi solutions today need to support decentralized protocol management, and allow their end-users to be the real driving force behind the platforms' value-generating activities.

Enzyme Finance, formerly known as Melon Protocol, is a DeFi platform that allows users to create and manage tokenized funds and strategies that other users can invest in. Enzyme aims to empower DeFi users by allowing anyone to become an investment manager or crypto investor — or both. Enzyme fund managers generate value for themselves, other users and the protocol, while fund investors support value-generating activity with their liquidity contributions.

 (MLN) is an Ethereum-based DeFi protocol that allows users to create tokenized investment products on-chain. 

Other platform users can invest in these funds to earn returns. These tokenized products, created as vaults, follow various trading strategies set by the vault creator. Additionally, creators can assign delegated traders to their vaults who can optimize the strategies followed by the vault. As such, Enzyme acts as a decentralized noncustodial solution that serves the needs of skilled crypto fund managers, traders and ordinary investors who would like to see their investments grow.

Enzyme’s protocol empowers the various groups of DeFi users and breaks down the barriers to entry to investment management, active trading and investing. In the world of traditional asset management, creating and launching an investment fund product is an extremely costly and time-consuming procedure. It could take aspiring institutional entities months, if not years, to get their fund vehicles approved, and the financial requirements for a successful asset management product are often staggeringly high, sometimes running into millions of dollars.

In stark contrast to the onerous requirements of traditional funds, launching your tokenized fund product on Enzyme Finance can take from minutes to a few hours at most. There are no significant capital requirements for a vault, either, and fund creators can assign a variety of fees and rules for joining their investment vehicle. Therefore, investors might need to meet certain requirements, depending upon the settings defined by the vault creator.

Enzyme Finance is among the oldest surviving DeFi protocols on the market. The project was initially conceptualized and founded in 2017 under the name Melon Protocol by mathematician Rito Tinkler and former vice president of Goldman Sachs, Mona El Isa, who also acted as the CEO of Melonport, the now-defunct private company behind the Melon Protocol project.

In 2019, Melon was launched on the Ethereum 

. The following year, Melon rebranded to Enzyme. Over the years, the platform underwent multiple version upgrades, culminating in the latest version, Enzyme v5. The latest version of the protocol has implemented (or aspires to implement within 2025) several innovations and improvements, including more cross-chain product options, better architectural modularity, simplified protocol fees, 

 as its infrastructure layer to support vault creation, depositing, trading strategy execution, cross-chain transfers and other key functions required for tokenized fund management and investing.

Vault creators are provided with easy-to-use tools to launch their tokenized asset management funds and execute fund operations — without any programming skills required. These tools help creators automate strategies to do the following:

Creators can also assign the role of Delegated Trader to users who are ready to help optimize the vault's yield using their own strategies.

Another key user group is the depositors, who invest their funds in the vaults to earn returns.

The platform also welcomes builders — developers who can contribute their own third-party solutions to improve the Enzyme ecosystem. Typical contributions by builders include the functionality to bridge Enzyme vault strategies with off-platform (and often, off-chain) financial vehicles. Builders also help develop specialized products for additional functions on Enzyme — such as an app to attract early liquidity, users and investors for projects at a pre-launch stage.

Enzyme.Blue is a specialized solution for institutional entities. It acts as an all-in-one platform for tokenized asset management, trading, analysis and valuation. While anyone can use the core Enzyme protocol, Enzyme.Blue provides all the necessary tools for complex fund management that addresses the needs of the most sophisticated enterprise users.

Using Enzyme.Blue, institutional digital asset managers can access over 30 DeFi protocols for features like 

Enzyme.Onyx is another enterprise-grade, packaged solution offered by Enzyme Finance. To be launched in the summer of 2025, Onyx offers institutional asset managers an advanced wallet tokenization layer. Wallets linked to Enzyme.Onyx can be used to seamlessly collect deposits from multiple participants and allocate the funds to a virtually unlimited variety of protocols and strategies.

Onyx is envisioned as a tokenization and asset management solution with more options in terms of assets and accessible blockchains than Blue. Per the project’s website, Onyx will boast network compatibility with any blockchain, whereas Enzyme.Blue is compatible with Ethereum, Base, Arbitrum (ARB) and Polygon (POL). Unlike Blue, Onyx will boast ultimate cross-chain accessibility. The number of cryptocurrencies supported by Onyx will be “unlimited,” while Blue features support for over 200 crypto assets.

Enzyme.Myso is a secure platform for creating, managing and trading on-chain options strategies. For options traders, Myso provides a rich set of customizable features. It also boasts wide token support, deep liquidity and on-chain, noncustodial settlement.

Enzyme.Myso may be an ideal product for options-based strategies for a wide variety of 

 entities. A typical user of Myso could be a digital asset management firm, a crypto whale or a 

MLN is Enzyme Finance’s native cryptocurrency. An ERC-20 asset on Ethereum, the MLN token has a number of key functions within the protocol. To begin with, users pay fees on Enzyme with MLN to utilize the services offered by the platform, including launching vaults and investing in them. MLN that’s collected from the protocol’s fees is automatically 

 in order to maintain supply scarcity for the asset.

The Enzyme network has also committed to minting 300,600 MLN each year to fund its ecosystem development. The Enzyme Council DAO can then allocate these MLN funds as grants to promising initiatives. Any unused MLN from these yearly allocations is burned at the end of the year.

Additionally, going forward, the token is envisioned to be used for governance as well, so MLN token holders will have the right to vote on the direction of/changes to the protocol.

MLN has a total and circulating supply of 3,001,195, with no specified supply cap.

 in Bybit's Innovation Zone as a Perpetual contract based on USDT. The contract allows you to trade with up to 50x leverage.

As of Apr 29, 2025, the MLN token is trading at $9.51, which is 96.3% lower than its ATH of $258.26 on Jan 4, 2018, and 430.5% higher than its ATL of $1.79 on Mar 13, 2020.

Long-term price forecasts for MLN are mostly bullish. DigitalCoinPrice 

 of $32.15 in 2027 and $48.73 in 2030, respectively, whilePricePrediction 

Enzyme Finance helps fund managers decentralize traditional asset management and apply diverse investment strategies. Its technology is among the leading solutions for institutional entities to launch completely customizable, own investment funds in the area of on-chain asset management. For individual users, the protocol can also be a great source of cost-effective investments, thanks to the variety of vault strategies it offers.

Additionally, the platform's enterprise-focused products enhance user experience by providing a unified asset management environment with a rich tool set to manage the most complex strategies. 

Thanks to Enzyme, cryptocurrency portfolio management has never been easier, both for fund managers and investors.

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Enzyme (MLN): The backbone of tokenization finance

Crypto

Investing

Bitcoin

Inflation, in general, increases the prices of goods and services due to a decrease in purchasing power. While, deflation is the entire opposite, resulting in the decline in the price of an economy.

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Inflation and its opposite, deflation, have an impact on the price of Bitcoin. The general increase in inflation tends to boost Bitcoin’s price. And when the inflation rate turns negative, deflation tends to drive the price of Bitcoin lower.

Due to the COVID-19 pandemic that results in an economic crisis, central banks around the world have been trying to stimulate the economy by printing more money. The world economy is in a cycle where central bankers are reluctant to remove money from the economy and have generally been adding more. As a result, the cycle of money printing has created an impact on Bitcoin’s price.

In economics, inflation is a general rise in the price level of an economy over time. Deflation, on the other hand, is the opposite — namely, the general decline in the prices of an economy.

When you buy a loaf of bread, you’ll pay about $1.37 per pound. About 70 years ago, that bread would have cost $0.14 per pound. The price has increased nearly tenfold over the past 70 years. That price increase is due to inflation. 

A little inflation of prices in an economy is positive. Inflating the prices of goods and services a little bit suggests there is an inherent demand for those products. Otherwise, when an economy experiences deflation, prices readjust lower and businesses lay off employees or go bankrupt, creating a negative feedback loop.

The topic of inflation versus deflation can be confusing to people at times. The reality is that anything can be inflated or deflated — whether a bicycle tire or prices in an economy. Therefore, it’s important to understand what is being referenced when the topics of inflation and deflation are introduced.

Inflation of Fiat Money: Supply and Credit

Most media outlets are referencing the general rise or fall in prices when they discuss inflation. 

For example, the chart above illustrates how prices have inflated over the past 100 years.

When prices inflate, the purchasing power of each dollar decreases.

In the chart above, we can see purchasing power depreciate consistently over the past 100 years. The $10 in 1913 is not the same as $10 in 2021, because what you can purchase with that $10 has changed significantly. You aren’t able to buy as many goods and services with that $10 today as you could almost a century ago.

Inflation and Deflation: Cause and Effect

Could it be that the change in consumer prices is the effect of inflation and not the cause? If so, what is the cause of inflation and deflation?

A better way to look at inflation is the expansion of money in the economy. Let’s oversimplify an example: bicycles. Let’s assume the demand for new bicycles is steady from year to year, and a new bicycle costs an average of $500.

If the amount of money in the system increases by 10%, then the cost of the bicycle will eventually need to increase as well — because there’s more money chasing the same amount of bicycles. The supply of money has increased, so more money is needed to buy the same product.

On the other hand, if the amount of money in the economy decreases, and there’s less money available, people simply wouldn’t be able to pay that much for bicycles. In this instance, the manufacturer would have a hard time selling their bicycles at $500 and would need to drop the price — or risk sitting on unsold goods.

In the bicycle example above, note that the need for bicycles remains constant, but the willingness of people to buy them has changed, depending on how much money is available in the economic system.

Therefore, we can define inflation and deflation as follows:

Deflation within an economy is often seen as an undesirable thing — and for the most part, it is. During the 1930s, the United States experienced deflation of its economy and the effects lingered for a decade.

In 2007–08, the worldwide economy deflated as the banking system seized up, freezing the flow of money around the world. 

However, deflation of consumer prices is not always a bad thing, as it could imply a more productive economy. 

Technology, for example, is deflationary by nature. The cost of a computer has decreased significantly over the past 25 years while the processing power of the computer has increased. 

In essence, you get a better computer today at a cheaper cost than 25 years ago, which is quite deflationary. Those cheaper computers allow us to be more productive — and to invest in other creations.

There are a lot of factors to weigh when determining whether an economy is experiencing inflation or deflation. For example, we touched on the productivity of an economy. A highly developed economy using computers is quite economically productive versus a village in a rural part of the world without advanced technology.

The demographics of the population over long periods matter, too. An aging population means fewer productive workers, whereas a young and growing population has a lot of future workers and pent-up demand. Part of the reason for massive price inflation over the past 70 years is the baby boomer generation. The population exploded, came of age, and became productive workers, while simultaneously creating a lot of demand.

The availability of credit also plays a part in the inflation-versus-deflation story. The cycles of inflation and deflation tend to be guided by banks’ willingness to lend money. There comes a point in time where society has over-consumed and the economy has overproduced. At that point, the ability to pay back loans comes under pressure, and banks pull back the amount of credit they offer. As credit contracts, so do the economy, leading to a deflation of prices.

The Inflation of Bitcoin Supply and Protocol

Earlier, we mentioned that anything can be inflated, from money in an economy to bicycle tires. Bitcoin was created to be a currency and store of value, and its inflation rate is preprogrammed into its code.

As you may know, Bitcoin is the fuel to maintain and secure the Bitcoin blockchain. Approximately every 10 minutes, new transactions are confirmed to the next block of the Bitcoin chain. The miners who confirm those blocks receive newly created Bitcoin as their reward for doing the work. Therefore, every 10 minutes, a new Bitcoin is getting added to the economy and is available to spend.

To limit and cap the number of bitcoins that will ever be created, Satoshi Nakamoto programmed a halving cycle into the code. Approximately every four years, the reward a miner receives is cut in half. New Bitcoin continues to be created but at a slowing rate.

On the chart above, the slope of the curve is decreasing, signaling a corresponding decrease in the amount of new Bitcoin being created each year. The next halving cycle is expected to take place around 2024, and the rate of new Bitcoin will slow even more at that time.

Eventually, the reward will become less than 1 Satoshi and no more Bitcoins will be created. At that point, there will be 21 million bitcoins available. However, that won’t happen for several generations, as it’s expected to take place around the year 2140.  

One of the biggest reasons people have been investing in Bitcoin is the scarcity of supply. There is a limit to the number of bitcoins that will ever be available, and the inflation rate can mathematically be figured out at any time.

What Happens to BTC Prices During Money Inflation?

Now that we know the supply of Bitcoin is fixed, the other primary factors that will affect its price will be the demand for Bitcoin and the supply of money in the economy. 

The demand for Bitcoin will rise and fall based on many different factors. It can be argued that Bitcoin is still in the early adoption stage of new technology. A recent survey found that 

, which cannot be considered mass adoption by any stretch. As a result, it can be argued that generally speaking, demand is likely to rise for Bitcoin, which may tug prices higher.

Let’s put demand to the side for a moment, assuming that it will remain constant or grow slightly. How might the inflation or deflation of fiat money in the world’s economies affect the price of Bitcoin?

The main developed economies in the world are increasing their money supply. When we have a worldwide economy with more money in it and a fixed number of bitcoins, the cost of Bitcoin priced in the fiat currency will rise.

The above chart represents the size of the Federal Reserve’s assets. The Fed is the central bank for the United States, and the size of its assets is a broad gauge for estimating how much money they are authorizing to be printed.

Before 2007, the Fed’s assets totaled nearly $1 trillion. In 2021, this number has ballooned to over $8 trillion. Therefore, it’s no surprise that the price of Bitcoin has been trending higher, as more money is being printed by developed economies.

What Happens to BTC Prices During Monetary Deflation?

On the other hand, there are times when money is destroyed or credit collapses, which creates a deflationary environment. Generally speaking, when the forces of deflation take over, we typically see the price of Bitcoin collapse as well.

The above chart shows the price of Bitcoin during the COVID-19 pandemic. When people are forced into their homes, they spend less in general, yet businesses have inventory and expenses to pay. As a result, during the pandemic businesses have fired workers, and revenues have collapsed.

The price of Bitcoin collapsed during this time as well. Some people may need the value of Bitcoin converted to their local fiat currency. For others, the price collapse could have been expected, as the pandemic began dragging prices lower with no end in sight.

The important point to remember is that the price of Bitcoin generally follows money creation. If the supply of money is increasing substantially, then the price of Bitcoin likely will rise. If the supply of money is decreasing, then the price of Bitcoin likely will fall. These trends don’t correspond directly, however, and are to be looked at in general terms, because the demand for Bitcoin also has an impact on prices.

Inflation vs. Deflation: Where Are We Now?

In response to the COVID-19 pandemic, central banks around the globe have been printing a lot of money. 

— red circle indicates when the COVID-19 pandemic hit the United States

As an example, the Federal Reserve has printed nearly 4 trillion dollars between March 2020 and July 2021. This is an astounding 100% increase in the money available in the U.S. economy.

Since the introduction of vaccines, businesses have reopened and commerce is returning in many areas. However, the effects of the pandemic are still being felt in high unemployment rates. In the chart above, the U.S. unemployment rate has fallen but is still above levels just before the pandemic started. 

One way to measure the effect of inflation or deflation is to review the consumer price index (CPI). 

The CPI involves complex calculations to determine if the costs of certain goods and services are increasing. When the CPI is rising, it suggests inflation’s effects are being felt in the economy. With better employment and increasing amounts of money printing, the CPI reading has been accelerating higher of late. As a result, the current inflationary environment should be supportive of Bitcoin prices.

If there comes a time when the central banks begin to hold levels of money printing or shrink the amount of the money supply, then it’s possible Bitcoin’s price may correct lower.

Can Bitcoin Be an Effective Hedge Against Inflation?

Fiat currency inflation occurs when the amount of money in the economic system grows significantly, causing the price of goods and services to rise. Therefore, citizens will want to invest in tools that can store the purchasing power of their wealth and act as a hedge against inflation. This could be investing in another economy, or in companies that tend to perform well in high inflation environments.

However, if your investments or inflation hedges aren’t keeping up with the rate of inflation, you’ll end up losing purchasing power and seeing your wealth evaporate. Since Bitcoin has a fixed amount of supply that can never be increased, it’s believed to be a store of value that can preserve the purchasing power of fiat money.

 In the image above, you can see that when the amount of money expands (blue line moves higher), Bitcoin tends to perform well and move higher as well (orange line). However, when the blue line moves lower, then deflation is at hand and Bitcoin tends to underperform.

Should You HODL Your Bitcoin or Spend It?

There’s an interesting cycle going on currently that positively impacts Bitcoin’s price. First, when the economy experiences a slowdown, central bankers and politicians are quick to provide stimulus. That stimulus is the result of extra money being printed, which stokes inflation. As inflation increases, central bankers consider cutting back on stimulus — which causes deflation of the money supply. Then, the economy begins to falter and more stimulus is queued up.

Bitcoin has reacted positively to a sequence of such events, and thus, it has a lagging benefit to deflation, too. The standard response is that deflation leads to a stimulus … which leads to inflation … which leads to higher Bitcoin pricing. Therefore, if you have the nerve to withstand the wait, HODLing is a reasonable investment strategy for picking up more Bitcoin at cheaper levels. 

Central banks closely follow the rate of inflation within their economy. A healthy economy is going to experience a small amount of inflation. If the inflation rate turns negative, then the economy experiences deflation, which can devastate efforts to restart the economy.

Since the COVID-19 pandemic began, the Federal Reserve has printed 4 trillion dollars of fiat money that has driven inflation rates higher. As a result, the price of Bitcoin has generally risen as people look to it as a store of value.

If central banks were to slow their money printing or otherwise decrease the amount of money in the economy, then the price of Bitcoin might fall in response to the tighter money supply.

Inflation vs. Deflation: The Effects on Bitcoin’s Prices

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