#CryptoCPIWatch Inflation is a multifaceted economic phenomenon that affects the policies of the Federal Reserve of the U.S. and those responsible for monetary policy. The decisions of the Federal Reserve are important because they impact credit rates, which in turn have a wide effect on the economy. For this reason, financial markets closely follow the actions of the Federal Reserve.

It is often said that Bitcoin, being a limited asset, is immune to inflation. This idea is based on the notion that, since there is a maximum of 21 million bitcoins that can exist, its scarcity could protect its value against the loss of purchasing power that characterizes inflation.

However, this is a very simplified view. Inflation is a complex process influenced by many economic factors, not just by the money supply. Moreover, the price of Bitcoin depends not only on its scarcity but also on market demand, regulation, technological adoption, and investor confidence. Therefore, while Bitcoin's scarcity is an interesting attribute, it does not automatically guarantee its resistance to inflation. It is crucial to understand inflation in its entirety to make claims about the relationship between Bitcoin's scarcity and its behavior in relation to it.