What’s the relationship between bitcoin and central banks?

At first glance, central banks and Bitcoin seem to have little in common. And yet, they watch each other closely. Why? Because central bank policies directly affect the purchasing power of money, and by extension, the appeal of Bitcoin.

When the economy slows down, central banks step in. They lower interest rates or “print” new money. Not literally with a printing press, but digitally: by buying debt, encouraging lending, and putting more money into circulation. And here’s the catch, more money means each euro or dollar is worth less. The bigger the pile, the less rare each bill becomes. It’s simple supply and demand.

A staggering stat: nearly 80% of all U.S. dollars in circulation were printed since early 2020. That kind of expansion erodes purchasing power, prompting many to look for alternatives.

Bitcoin flips the script. There will never be more than 21 million. No printing press, no central control. That makes Bitcoin scarce and predictable. In a world where dollars and euros are created by the billions, that’s exactly what many find attractive.

Every time a central bank announces another stimulus program, we see the same pattern: investors flee to safety. Away from money that loses value, toward assets that are truly scarce. Gold. Real estate. And increasingly: Bitcoin. Not necessarily out of protest, but to protect their purchasing power.

Meanwhile, central banks are working on their own digital currencies: CBDCs, a digital euro or dollar. But look closer and the principle remains the same: fiat money, with central oversight, inflation, and adjustable rules. For those seeking transparency, certainty, and scarcity, Bitcoin remains the more compelling option.

This isn’t to say central banks are bad, far from it. They play a vital role in keeping economies running. But it’s important to understand that their policies cause your euros or dollars to lose value over time.

Bitcoin was born in response to central banks. Today, it’s become a mirror of their behavior. As long as central banks keep creating new money, the demand for alternatives will persist. And as long as scarcity matters, Bitcoin will remain relevant.