The latest inflation report was, thankfully, slightly better than expected. The Consumer Price Index rose 2.8% annually in February, less than the 3% that some economists were estimating. For most of the past two decades, inflation has averaged around 2%, research from The Motley Fool shows.

But while the latest data shows the U.S. is getting closer to its 2% inflation target, not everyone is optimistic that it will reach it soon. President Donald Trump's tariffs on trading partners have sparked concerns that inflation will begin climbing again. A stock market sell-off since the beginning of the year is a response to the uncertainty some investors feel, and that has them searching for alternative investments.

One alternative is to buy cryptocurrencies, which are often viewed as a hedge against inflation. While riskier than stocks, crypto can be a smart way to diversify your portfolio, especially in uncertain times. Here are two reasons why buying Bitcoin (BTC 1.78%) now could be a good option for combating a potential inflation spike.

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1. A fixed supply of coins fights inflation

There are currently about 19.5 million Bitcoins in circulation, and only 21 million total can be mined. After that, no more Bitcoins can be created. Most experts estimate that Bitcoin will reach its total amount by 2140. If that seems like a long way off, it's because as more Bitcoins are mined, the process becomes increasingly difficult.

Contrast that with global currencies, of which an unlimited amount can be theoretically printed. During economic downturns, governments often print more money and inject it into the economy to spur growth. But when inflation kicks in, the value of the currency drops.

The benefit of owning Bitcoin, especially during surging inflation, is that it's inherently scarce. Bitcoin's finite supply helps to naturally regulate its value, which is why some investors view it as a hedge against inflation.

2. It's far easier to own Bitcoin

It used to be far more difficult to buy and sell cryptocurrencies than it is today. Last year, the SEC approved the first spot Bitcoin exchange-traded funds (ETFs) that make it easy to invest in Bitcoin in smaller amounts.

The price of one Bitcoin is about $90,000 right now, making it difficult to purchase one. But the good news is that ETFs pool investor funds together, allowing you to invest smaller amounts than you would if you tried to buy one Bitcoin outright. You can add some Bitcoin exposure to your portfolio for just the price of one share of an ETF, many of which are well under $100 right now.

One of the most popular options is the iShares Bitcoin Trust ETF (IBIT -2.60%), which was one of the first to launch last year and has about $52 billion in assets. With so many people using it, buying and selling the ETF is fast and relatively inexpensive, which means your investment is fairly liquid.

The iShares Bitcoin Trust ETF charges a reasonable 0.25% expense ratio, meaning you'll pay just $2.50 in annual fees for every $1,000 invested. All the Bitcoins in the ETF are held by Coinbase, a leading cryptocurrency exchange company, so there's little risk of them being lost or stolen.

Remember this before buying Bitcoin

Whether you buy Bitcoin directly or invest in it through an ETF, you need to understand that cryptocurrency prices are inherently volatile. While Bitcoin may be more stable than other crypto values, it can still experience significant price changes in a short amount of time.

That doesn't mean you shouldn't invest in Bitcoin. It just means that even if high inflation rears its ugly head again, it's likely Bitcoin's price could be temporarily affected. For that reason, it's a good idea to limit your crypto exposure to just 5% to 10% of your portfolio.

While we don't know how all of the tariff threats will play out and what their effect will be on the economy, diversifying your portfolio with some Bitcoin might not be a bad idea right now.