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

In a blog post first published and updated in June 2022, the St. Louis Fed compared its egg purchases to BTC and the U.S. dollar — and the results are still surprising.

Bitcoin to USD: “Egg Bloat” Going Nowhere

Bitcoin holders arguably have better use cases for BTC holdings than buying eggs, but that was the subject of a dedicated blog post by the Federal Reserve, which attempted to prove that Bitcoin’s purchasing power relative to the U.S. dollar is not competitive.

To do this, its anonymous author measured the price of a dozen eggs since January 2021 in BTC (measured in satoshis) and U.S. dollars.

“The price fluctuated wildly, between 2829 and 6086, which is much more volatile than the USD price,” the post concluded.

“Plus, you need to add in bitcoin transaction fees, which have been around $2 lately but can sometimes spike to over $50. Hopefully, if you buy with bitcoin, you’ll have more eggs in your basket.

Nonetheless, the included chart shows that the amount of SAT needed to buy the same dozen eggs has fallen more than the equivalent amount of USD since December 2022, when both currencies peaked.

As of August 2023 (the latest month for which the Fed has data), buying demand from BTC holders has fallen by 70%, while that of the U.S. dollar has fallen by 58%.

Compared to the beginning of 2021, eggs cost more in both currencies — 39% and 73% respectively, compared to 73% for USD and BTC. However, arbitrary time frame comparisons are still not very helpful here.

At the time, BTC/USD was trading at almost the same price as it is currently, and year-over-year growth in the U.S. Consumer Price Index (CPI) was below the Fed’s own 2% target. With the latter now a thing of the past, only a long-term overview can truly provide an understanding of Bitcoin’s performance.

The price of eggs is a fraction of what it was the year before the Bitcoin halving in 2019. The “egg bulge” seen in 2023 is a relative blip on the landscape.

In dollar terms, the picture is that prices have been rising steadily – for example, the average price in mid-2019 was just over $1.20 per dozen, 40% lower than today.

Recession is imminent

As Cointelegraph reported, attention this month has been focused on the U.S. dollar as the U.S. Dollar Index (DXY) surged to near one-year highs.

Related: Bitcoin Bull Run Awaits as US Faces ‘Steep Bear Market’ – Arthur Hayes

Analysts believe foreign actions may seek to correct the imbalance as their currencies suffer, while behind the scenes the U.S. economy is showing warning signs.

The likelihood of a recession in 2024 is growing, with even the Federal Reserve’s own data showing the chance of a recession approaching 60% in September, while bond yields have surged in what has been dubbed the “bear market steepness.”

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

Author: Deepchain DCNews

Compiled by: Sister Shen

Twitter: DeepChain

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