Need An Inflation Hedge? Bitcoin Has Delivered 99.996% Deflation

Many notable Wall Street investors and analysts have bought into the idea of using cryptocurrencies as a hedge against rising prices.

On Wednesday, U.S. inflation data come in much hotter-than-expected. Almost immediately after the number hit the wires, Bitcoin notched a record high. Coincidence?

To many, it's not so much a chance happening as something they'd been predicting for a long time now -- that the world's largest digital asset makes for a great hedge against rising prices in the economy.

Here's the gist of the argument: unlike dollars or any other traditional currency, the digital coin is designed to have a limited supply, so it can't be devalued by a government or a central bank distributing too much of it.

One way to test the thesis is to plot U.S. prices against Bitcoin. Bloomberg Opinion's John Authers has done the math: Over the last decade, the headline consumer price index has risen roughly 28%, and denominating that gauge in Bitcoin shows deflation of 99.996%. In other words, what cost one Bitcoin 10 years ago would now cost 0.004 satoshis, or a smaller unit of the cryptocurrency that now trades at around $65,000.