Bitcoin is Immune to Inflation

Bitcoin is a decentralized currency. This implies that unlike fiat money, governments cannot manipulate the Bitcoin ecosystem by pushing new bitcoin units into circulation. To be more precise, the Bitcoin network is algorithmically hard-capped at 21 million BTC units, out of which 18 million are currently in circulation, that's 85% of the total BTC supply. Moreover, around 4 million BTCs have already been lost according to Chainalysis research, which significantly diminishes the total supply.

New bitcoins are released as a reward for the mining activity on the Bitcoin network. Miners are rewarded with BTC units for contributing their computational power to verify transactions and adding new blocks to the Bitcoin blockchain.

Also, the bitcoin halving event that occurs every four years, slashes the mining rewards by half. In 2009, the mining reward was 50 BTCs per newly mined block. This was reduced to 6.25 BTCs after the recent halving event on 11th May 2020.  Next halving is expected in 2024.

In theory, the limited supply of bitcoins will increase its value as the demand surges. Plus, the halving event acts as an internal inflation control for bitcoin by reducing the pace of bitcoin release. All of these factors will make bitcoin immune to inflation. The fact that the purchasing power of bitcoin has increased exponentially since its launch only seems to verify this claim.

The Recession Effect

Well, bitcoin was launched after the 2008 recession and it emerged as a potential solution for the loopholes inherent in the increasing centralization of the economy. It was the social distrust in centralized fiat money that fueled the rise of decentralized cryptocurrency - bitcoin.

Yet again, as the world is slowly falling into recession due to the COVID-19 pandemic, people are realizing the worth of bitcoin. Central banks are poised to flush the economy by printing new currencies to control inflation. This will further reduce the purchasing power of fiat money as the prices of commodities will increase. Moreover, the institutional distrust planted during the 2020 U.S. presidential election is reducing the confidence in the dollar.

On the other hand, bitcoin seems largely unaffected by the ongoing economic stress as its supply is algorithmically limited and controlled. The fact that bitcoin reached a record high of $28,700 on December 31, 2020 is indicative of this claim. Most importantly, bitcoin is now seen as a potential alternative to fiat in some ways.

https://bitsgap.com/blog/what-is-driving-the-cryptocurrency-market/#the-recession-effect