Bitcoin-Ether Dynamics and Inflation Theories

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Bitcoin-Ether Dynamics and Inflation Theories

By Blu Putnam, Chief Economist
Erik Norland, Senior Economist
CME Group

Bitcoin’s Remarkable Journey, Correlation With Ether

  • ​​Ether is highly correlated to and more volatile than bitcoin.
  • When bitcoin prices rise, ether prices tend to rise even higher.
  • Bitcoin retains first mover, incumbency advantage over cryptos.
  • Ether has more practical uses than bitcoin, which is mostly a store of value.
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How to Accurately Forecast Inflation?

  • ​​​​Short-term supply shocks do not tend to create an era of lasting inflation.
  • Persistent inflation arises when excess demand overruns supply shortages.
  • Uncertain if pandemic-related policies might cause 1970s style inflation.
  • Is there an economic theory that can accurately forecast inflation?
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