Bitcoin’s inflation hedge has a hidden cost, and leverage makes it worse
Summary
The piece explains how financing choices affect Bitcoin returns even when its price is unchanged. Cash buyers forgo potential interest income, while borrowers incur interest and face liquidation risk; leverage amplifies gains and losses. Futures premiums and perpetual funding can also impose less-visible, variable costs. Inflation may support Bitcoin’s scarcity narrative, but it does not guarantee price gains. Investors should account for borrowing rates, opportunity cost, futures basis, funding, collateral, fees and holding periods when assessing whether expected appreciation justifies the costs.
