September’s US inflation report showed consumer prices up 3.7% year over year, keeping interest rates elevated and increasing borrowing costs to buy Bitcoin. Two investors buying Bitcoin at the same price can achieve very different returns depending on their financing method: a cash buyer may have no loss if Bitcoin remains flat, while an investor borrowing $10,000 at 8% annually loses 8% of their capital even if Bitcoin doesn’t fall. Bitcoin futures can obscure financing costs in the entry price, with a 1.5% premium over 90 days, or roughly 6.08% annualized. Inflation may strengthen the case for owning Bitcoin, but high financing costs can significantly shorten the time investors have to prove that thesis correct.
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