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Cryptocurrency as an alternative inflation hedge?

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  • L. A. Smales

Abstract

We examine the association of Bitcoin, and other cryptocurrency, returns with changes in inflation expectations, and form a comparison with gold, a traditional inflation hedge. We control for uncertainty in economic policy, cryptocurrency, and financial markets, and show that cryptocurrency returns are positively related to changes in US inflation expectations only for a limited set of circumstances. Unlike with gold, the identified relationship is only significant for short‐term inflation expectations, and when inflation or market‐implied inflation expectations are below 2% (the Fed's inflation target). Moreover, cryptocurrency returns tend to be lower on days with monthly consumer price index (CPI) announcements and respond negatively to CPI surprises. Our results suggest that cryptocurrencies do not currently offer investors a viable alternative to gold for hedging inflation.

Suggested Citation

  • L. A. Smales, 2024. "Cryptocurrency as an alternative inflation hedge?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(2), pages 1589-1611, June.
    • Handle: RePEc:bla:acctfi:v:64:y:2024:i:2:p:1589-1611
    DOI: 10.1111/acfi.13193
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    3. Thai Hong Le & Duc Anh Nguyen & Tu Thanh Vu, 2025. "Examining the co-movement between cryptocurrency uncertainty and central bank digital currency uncertainty," HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE, HO CHI MINH CITY OPEN UNIVERSITY, vol. 15(5), pages 69-84.
    4. Kim, Young-Sung & Kim, Dong-Jun & Choi, Sun-Yong, 2025. "Dynamic spillover analysis between FX and cryptocurrency markets across different market conditions: A quantile VAR approach," The North American Journal of Economics and Finance, Elsevier, vol. 80(C).
    5. Naeem, Muhammad Abubakr & Gul, Raazia & Arfaoui, Nadia & Bakry, Walid & Bhatti, Muhammad Ishaq, 2025. "Riding the storm: AI-driven spillover effects across technology, commodities, and conventional markets," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    6. Gao, Li & Shi, Yuan & Zheng, Yi, 2025. "Cryptocurrency exposure and the cost of debt," Finance Research Letters, Elsevier, vol. 73(C).
    7. Maxime L. D. Nicolas & Franc{c}ois Sicard & Marion Laboure & Zixin Sun & Anah'i Rodr'iguez-Mart'inez, 2026. "Is Bitcoin A Hedge Against Central Banking? Evidence from AI-Driven Monetary Policy Expectations," Papers 2604.08825, arXiv.org.

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