Bitcoin’s price jumped Wednesday by the most in two weeks amid mounting inflation concerns and hopes for mass adoption after El Salvador’s parliament approved the cryptocurrency as legal tender. The cryptocurrency was changing hands near $36,500 at press time, having picked up from a bid near $31,000 late Tuesday. The price was up 9% since 0:00 coordinated universal time, the biggest gain since May 24.
Data released by China early today showed the producer price index (PPI), also known as factory-gate inflation, rose 9% last month, the biggest year-over-year increase since September 2008. China’s PPI typically adds to inflationary pressures worldwide because the country is a major buyer and supplier globally.
“Rising costs everywhere, in particular in China, will be adding to global inflationary pressures,” Dariusz Kowalczyk, an economist at Crédit Agricole, told the Financial Times. “I think we are going to live with higher inflation globally, and what’s happening in China will contribute to that.” That’s bullish for bitcoin, which is widely considered an inflation hedge because the pace of expansion of its supply is reduced by half every four years.
Bitcoin is up about 12% over the past 24-hours, showing near-term resilience. “The market is bottoming on bad news,” wrote David Grider, strategist at FundStrat, in a newsletter published today. China’s Qinghai province has ordered all crypto miners to shut down based on government concerns about high energy usage. And the crackdown on money laundering intensified as Chinese authorities arrested over 1,000 people who allegedly used cryptocurrency to evade the law.