Inflation may have slowed in the US, but elsewhere, it’s a different story. In fact, inflation in both France and Spain has risen to a level not seen in nearly four decades. The official numbers are worrying.
Cryptocurrency adoption in both countries has been on the rise. But will the upcoming financial pressures have negative effects on the cryptocurrency industry?
The story of Spain and France
Spain’s annual inflation rate reached 10.8% in July, slightly above market expectations of 10.6%. Official data show that the number is the highest since 1984. The Bank of Spain, in a recent report, found inflation to be one of the country’s biggest problems. As a result, a wave of institutional instability cannot be undermined.
However, inflation could lead to the adoption of cryptocurrency in the Iberian country. Although the level of adoption in Spain lags far behind other advanced and developing economies, the popularity of the asset class in the country has followed an upward trajectory.
As previously reported, the CNMV estimated that approximately 7% of adults in Spain have invested in cryptocurrencies. The Spanish regulator surveyed 1,500 adults in the country to see which part of them had allocated some of their money to the digital asset market. It is interesting that the individuals belonging to this group are young, educated and well-paid.
The upside can also be attributed to regulatory clarity in the space. Spanish authorities consider digital assets a legal form of investment. At the same time, capital gains from the sale of these tokens are taxed in the range of 19% to 23%
France has a similar story too, with inflation at 6.1% in July. The last time the numbers were this high was in 1985. Many experts believe that inflation was doing the best part of a decade and that the epidemic had just precipitated it.
European Crisis and Bitcoin
There is growing uncertainty as to whether Bitcoin and cryptocurrencies can, in fact, prove to be an effective hedge against price increases. However, amid the extreme volatility of the past couple of months, a weaker euro and a stronger dollar are likely to cause very real problems for Europeans.
Bitcoin and cryptocurrency could be a way out of the looming gas shortage, soaring energy prices, and the impending recession brought on by the current financial system. However, the ongoing energy crisis in Europe threatens a long-term bear market.
Things could get worse if Russia imposes potential gas cuts, which could push some energy-dependent Russian countries in the region into deep economic crises.
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