Inflation is boosting Bitcoin's investment appeal while higher interest rates are also raising the cost of holding it. An analysis found that even if investors hold Bitcoin at the same price over the same period, returns can diverge sharply depending on how purchases are financed. Cryptocurrency outlet CryptoSlate reported this on Oct. 17 local time.

The U.S. consumer price index rose 3.7 percent in September from a year earlier. As inflation pressure persists, interest rates are also staying at high levels, increasing the cost of borrowing to buy Bitcoin. The Federal Reserve said the yield on 3-month U.S. Treasuries was 4.26 percent as of Oct. 13.

An investor who buys $10,000 worth with cash does not need to pay interest. But putting the same money into Treasuries would have earned $426 over a year. That implies an opportunity cost of that amount even if Bitcoin is unchanged.

The burden is bigger for a borrower. If someone borrows $10,000 at 8 percent a year to buy $20,000 worth, annual interest alone is $800. If Bitcoin is flat for a year, repaying the loan leaves $9,200, meaning an 8 percent loss of the principal. Bitcoin would need to rise 4 percent to cover the interest, and 6.13 percent to also offset the cash buyer's opportunity cost.

Outcomes by price moves are as follows. If Bitcoin falls 10 percent, the cash investor has $9,000 left and the leveraged investor has $7,200. If it rises 10 percent, they end up with $11,000 and $11,200, respectively, making leverage advantageous. In a downturn, margin calls or forced liquidation could prevent an investor from benefiting during a recovery phase.

For futures, the cost is embedded in the entry price. If the spot price is $80,000 and the 90-day futures price is $81,200, the premium is $1,200, or 1.5 percent, which annualises to about 6.08 percent. If the spot price is unchanged at expiry, a futures buyer loses $1,200 even without borrowing. Perpetual futures with no expiry align prices through funding fees. Under Deribit rules, if the funding rate is positive, longs pay shorts, and if it is negative, the reverse applies. Even when Treasury yields are high, funding rates can turn negative in a down market.

The outlet said an inflation hedge and inflation linkage are different. Bitcoin has a supply cap of 21 million, and Strategy chairman Michael Saylor (마이클 세일러) has presented that as a core argument. But a rise in CPI does not mean the price rises. Treasury Inflation-Protected Securities adjust principal in line with the price index, and the 10-year yield was 2.88 percent on Oct. 13.

CryptoSlate said, "Inflation can strengthen the rationale for holding Bitcoin, but expensive financing costs reduce the time available to prove that rationale."