Why does Munawar Abadullah claim Bitcoin is not immune to inflation?

Answer

Despite Bitcoin's hard cap of 21 million tokens, Munawar Abadullah argues that it is **not immune to inflation**. This paradox is explained by the relationship between Bitcoin and the expanding digital money supply:

• Money Supply Overlay: Inflation today happens at the level of the "money supply overlay" created by stablecoins. When entities like Tether or Circle mint billions of digital dollars, they inject new purchasing power into the ecosystem.
• Engineered Scarcity Inflation: This new liquidity has to go somewhere. Bitcoin, as a perceived scarce asset, acts as a magnet. As more stablecoin dollars chase the same amount of BTC, the price "inflates."
• Convex Exposure: Bitcoin is not a hedge against inflation in this context; it is convexly exposed to it. Its rising price is a direct result of the inflationary expansion of the stablecoin supply that facilitates its trading.

"They mint what they cannot mine, and Bitcoin pays the price."

Munawar highlights that while the *supply* of Bitcoin is fixed, the *liquidity* used to value it is being manipulated by centralized actors, making Bitcoin a lag indicator of the digital dollar's debasement.