Bitcoin

Bitcoin still beating US dollar versus ‘eggflation’ — Fed data

Bitcoin (BTC) is beating inflation better than the U.S. dollar, the Federal Reserve says — unintentionally.

In a blog post first released in June 2022 and since updated, the St. Louis Fed compares buying eggs with BTC compared to USD — still with surprising results.

Bitcoin vs. US dollar: “Eggflation” has gone nowhere

Bitcoin hodlers arguably have many better use cases for their BTC holdings than buying eggs, but that is the topic of a dedicated Fed blog post which attempts to demonstrate Bitcoin’s uncompetitive buying power versus the dollar.

To do so, its anonymous author measured the price of a dozen eggs in BTC, measured in satoshis, and USD since January 2021.

“The price fluctuates quite a bit, between 2829 and 6086, which is much more than it did for the U.S. dollar price,” the post concludes.

“Plus, you’d need to add a bitcoin transaction fee, which has been about $2 lately, but which can spike above $50 on occasion. Hopefully, if you were making this purchase with bitcoin, you’d put many many more eggs in your basket.”

The charts included nonetheless show that since reaching a peak in both currencies in December 2022, the number of sats required to purchase the same dozen eggs has decreased more than the equivalent USD.

BTC hodlers require 70% fewer for the purchase as of August 2023, the latest month for which Fed data is available, versus 58% less USD.

Average price of a dozen eggs in satoshis chart (screenshot). Source: St. Louis Fed

Versus the start of 2021, the cost of eggs is higher for both currencies — 39% versus 73% for USD and BTC, respectively. Here, however, the arbitrary timeframe comparison remains less than helpful.

At the time, BTC/USD traded at practically the same levels as at present, while the U.S. Consumer Price Index (CPI) year-on-year increase was under the Fed’s own 2% target. With the latter now a thing of the past, only a longer-term synopsis provides real insight into Bitcoin’s performance.

The price of eggs is a fraction of what it was during Bitcoin’s last pre-halving year in 2019. “Eggflation” seen in 2023 is a comparative blip on the landscape.

In dollar terms, the picture is one of solid price increases — the average in mid-2019, for example, was barely above $1.20 per dozen, or 40% less than now.

Average price of a dozen eggs in USD chart (screenshot). Source: St. Louis Fed

Recession looms large

As Cointelegraph reported, attention is focusing on the greenback this month as the U.S. dollar index (DXY) balloons to near one-year highs.

Related: Bitcoin bull market awaits as US faces ‘bear steepener’ — Arthur Hayes

Actions by foreign states may seek to redress the imbalance as their currencies suffer, analysts suggest, while under the hood, the U.S. economy is showing warning signs.

Recession in 2024 is becoming increasingly likely, with even the Fed’s own data putting the odds at near 60% in September, while bond yields skyrocket in a fit of what is known as “bear steepening.”

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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