Spain and France Struggle With Highest Inflation Rates Since 1984
The inflation rate may have slowed in the US, but elsewhere, it’s a different story. In fact, both France’s (6.1%) and Spain’s (10.8%) inflation rates have increased to a level not seen in almost four decades.
Crypto adoption in both countries has been on the rise. But will the upcoming financial strains have negative implications on the crypto industry?
Spain and France’s Tale
Spain’s annual inflation rate hit 10.8% in July, a little above market expectations of 10.6%. Official data shows that the figure is the highest since 1984. Bank of Spain, in a recent report, found inflation to be one of the biggest problems plaguing the country. A wave of institutional instability triggering, as a result, cannot be undermined.
However, inflation can potentially drive crypto adoption in the Iberian nation. Even though Spain’s adoption level is far behind the other developed and developing economies, the popularity of the asset class in the country has followed an upward trajectory.
The National Securities Market Commission (CNMV) has estimated that nearly 7% of Spain’s adults have invested in crypto. The Spanish regulator surveyed 1,500 adults in the country to find out what chunk of them have allocated some of their funds to the digital asset market. Individuals belonging to this cohort, interestingly, happen to be young, educated, and well-paid individuals.
The uptrend can also be attributed to regulatory clarity in the space. Spanish authorities deem digital assets to be a legal form of investment. Simultaneously, capital gains from the sale of these tokens are taxed in a range of 19% to 23%
France, too has a similar story, with the inflation rate hitting 6.1% in July. The last time the figures were this high was back in 1985. Many experts believe that inflation has been making for the best part of a decade and that the pandemic just expedited it.
European Crisis and Bitcoin
There is a rising uncertainty if Bitcoin and crypto can, in fact, prove to be an effective hedge against rising prices. However, amidst the intense volatility in the past couple of months, a weakening euro and strengthening dollar has the potential to cause very real problems for Europeans.
Bitcoin and crypto can be a way out of the looming gas shortages, high energy prices, and an impending recession that the current financial system has brought about. However, the persisting energy crisis in Europe threatens a prolonged bear market.
Things may worse if Russia imposes potential gas cut-offs, which could drive certain Russian energy-dependent countries in the region into deep economic crises.
