US inflation peaked at 9.1% in June 2022. By the end of that month, Bitcoin was 71% below its November 2021 high.
Bitcoin's supply is capped at 21 million coins. In theory, a fixed supply should protect its value as prices rise. Here is how it did against gold and US prices through the 2021–23 inflation surge. We also look at what has happened since.
Is Bitcoin an inflation hedge? An inflation hedge is an asset that holds its buying power as prices rise. Bitcoin has beaten US prices over the long run, but it lost value in both recent bouts of rising inflation.
From the end of February 2021 to the end of 2023, US prices rose 16.6% and gold rose 18.1%. Bitcoin ended below where it started.
When inflation peaked in June 2022, Bitcoin was 71% below its November 2021 high.
From the end of 2023 to September 2026, Bitcoin roughly doubled, far ahead of prices. Yet when inflation rose again in early 2026, it fell 16.1%.
The case for Bitcoin as an inflation hedge and how we test it
Bitcoin is a digital currency that runs on a shared public ledger, with no central bank behind it. New coins are created through a process called mining, at a pace that slows over time.
According to bitcoin.org, "only 21 million bitcoins will ever be created". The founding white paper, by Satoshi Nakamoto, says that once a set number of coins is in circulation, the system can be "completely inflation free". A central bank can create more dollars. The Bitcoin network cannot create more than 21 million coins.
An inflation hedge should hold its buying power as prices rise. We test that against the Consumer Price Index (CPI), the cost of a basket of goods and services bought by US households. We explain inflation in What Is Inflation? For gold, we use GLD (the gold exchange-traded fund, or ETF).
Bitcoin, gold and inflation from 2021 to 2023
US inflation was 1.7% in February 2021. It rose to 2.6% in March, the start of the surge. So our test starts at the end of February 2021. The Federal Reserve raised interest rates 11 times from March 2022 to July 2023 to bring inflation down, as we show in Interest Rates and Inflation.
Source: YX Insights price data; FRED (CPIAUCNS); YX Insights
The chart sets Bitcoin, gold and the CPI to 100 at the end of February 2021. A reading of 120 means a rise of 20%.
Bitcoin peaked at 146 on 8 November 2021. That was $67,532. A year later, it hit 34, or $15,759. By the end of 2023, it was at 91, still below its start. Gold ended at 118, up 18.1%. The CPI ended at 117, up 16.6%. So gold just kept pace with prices, while Bitcoin lost ground.
The timing matters most. At the end of June 2022, when inflation peaked, Bitcoin stood at 43. Gold was at 104. Inflation stayed above 6% in every month of 2022. Over that calendar year, Bitcoin fell 64%. QQQ (the Nasdaq-100 ETF) fell 33% with dividends counted. Gold fell 0.8%.
How far Bitcoin and gold fell from their highs
Source: YX Insights price data
The chart shows how far each asset stood below its previous high on each day. Bitcoin's worst fall in the window was 77%, from 8 November 2021 to 21 November 2022. Gold's worst was 21%, from 8 March 2022 to 26 September 2022.
Bitcoin has fallen this far before. From December 2017 to December 2018, it fell 83%.
Bitcoin, gold and inflation from 2024 to 2026
Source: YX Insights price data; FRED (CPIAUCNS); YX Insights
The chart sets all three to 100 at the end of 2023. By 24 September 2026, Bitcoin stood at 201 and gold at 205. The CPI was at 109 in August 2026, its latest reading. Both assets beat inflation by a wide margin.
The path was again rough for Bitcoin. It peaked at $124,720 on 6 October 2025. It then fell 53% to $58,532 on 30 June 2026. On 24 September 2026, it was $84,381, 32% below that high.
Inflation rose again in 2026, from 2.4% in January to 4.2% in May. From the end of 2025 to the end of May 2026, Bitcoin fell 16.1%. Gold rose 5.3%.
So over the long run, Bitcoin has beaten prices. In both bouts of rising inflation, it lost value. That is the test a hedge has to pass.
Bitcoin's correlation with the Nasdaq-100, gold and inflation
Correlation measures how closely two things move together. It runs from −1 to +1. A reading of +1 means they always move in the same direction. A reading near 0 means no link.
We compare Bitcoin's monthly returns with three things: QQQ, gold and the monthly change in the CPI.
Source: YX Insights price data; FRED (CPIAUCSL); YX Insights
With only a few years of monthly data, a link can appear by luck. So we use a cut-off: the level a reading must pass before luck becomes an unlikely explanation, at the usual 95% confidence. Over 36 months, the cut-off is about 0.33. Over 30 months, it is about 0.36.
From 2017 to 2020, all three links were weak, at 0.23 or below. From 2021 to 2023, only the Nasdaq-100 link passed the cut-off, at 0.49. The link to gold was 0.07, while the link to monthly inflation was −0.25.
From 2024 to August 2026, the link to monthly inflation was 0.34. The Nasdaq-100 link was 0.35. The October 2025 CPI was never published, so this window has 30 months of data. Neither reading passed the 0.36 cut-off. No period shows a steady link between Bitcoin and inflation.
How to read Bitcoin as an inflation hedge
A few checks help:
Look at when inflation was high. From February 2021 to September 2026, Bitcoin rose 82%. Prices rose 27.4% to August 2026. Yet at the inflation peak in June 2022, Bitcoin was 57% below where our test started.
Size the falls. Bitcoin has fallen more than 75% from a high twice in our data, in 2018 and in 2022.
Compare it with gold. We test gold over 55 years in Is Gold an Inflation Hedge? We cover what moves gold in What Drives the Gold Price?
Bitcoin's fixed supply makes the case for it as a hedge, but the data do not bear it out. It has beaten prices over the long run. Yet when inflation peaked in June 2022, it was 71% below its high. It fell again when inflation rose in 2026.
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DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.