Using proprietary data from a dominant crypto exchange in India and the country’s Household Inflation Expectations Survey, we document a significant positive correlation between inflation expectations and individual cryptocurrency
purchases. Furthermore, inflation expectations prompt more new investors, particularly male investors, to begin purchasing cryptocurrencies. Token-wise, this effect is predominantly concentrated in Bitcoin (BTC) and Tether (USDT). The effect also has causal interpretations, as confirmed by using idiosyncratic shocks in current perceived inflation as an instrumental variable for long-term inflation expectations. We also discover that the relationship between inflation expectations and cryptocurrency investment is not driven by speculative expected returns from cryptocurrencies. Our findings suggest that certain cryptocurrencies have already been perceived by households as inflation hedges.