Bitcoin Could Benefit from 2025 Inflation Surge, Says Fidelity’s Latest Analysis

Fidelity’s latest analysis suggests that Bitcoin (BTC) could benefit from a potential inflation surge in 2025, particularly if the U.S. faces stagflation.

Chris Kuiper, Director of Research at Fidelity Digital Assets, points to persistent inflation and rising fiscal deficits as indicators that the U.S. could enter a challenging economic phase, marked by low growth, high inflation, and possibly high unemployment.

Kuiper explains that Bitcoin’s performance during such an environment would largely depend on the government’s fiscal and monetary response. If the U.S. government focuses on stimulating the economy through increased spending or monetary tools, Bitcoin could perform positively, though likely with a delay.

Conversely, if the emphasis shifts to reducing inflation through tight fiscal measures and a reduction in the money supply, Bitcoin might face challenges.

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Kuiper also referenced historical trends, noting that gold performed well during the inflationary periods of the 1970s and 1980s. He suggests that Bitcoin, much like gold, could serve as a valuable asset in a portfolio during various economic conditions, particularly if fiscal stimulus is implemented to address a potential recession. If inflation remains high and risk assets continue to appreciate, Bitcoin could see further gains.

However, if the government drastically reduces spending or tightens the money supply, Bitcoin could face some relative obstacles. But according to Kuiper, this scenario is unlikely given the current state of high fiscal deficits and a deeply indebted financial system.

Alexander Stefanov