The relative inflation rates in Spain and France are 10.8% and 6.1%.
The usage of cryptocurrencies has increased in both nations. However, could the impending financial difficulties have detrimental effects on the cryptocurrency industry?
In July, Spain’s annual inflation rate reached 10.8%, above market predictions of 10.6%. Official statistics indicate that this number is the highest since 1984. In a recent study, the Bank of Spain identified inflation as one of the country’s most serious challenges. Consequently, a wave of institutional instability cannot be dismissed.
Nonetheless, inflation may spur crypto adoption in the Iberian country. Even though Spain’s adoption rate lags well behind other developed and emerging nations, the asset class’s popularity has been on the rise.
As previously reported, the National Securities Market Commission (CNMV) estimates that around 7% of individuals in Spain have invested in cryptocurrencies. The Spanish regulator polled 1,500 persons in the nation to determine what proportion of them had invested in the digital asset market. Interestingly, the members of this generation are youthful, well-educated, and well-compensated.
The upward tendency might also be ascribed to the area’s regulatory clarity. The Spanish government recognises digital assets as a legitimate type of investment. Additionally, capital gains on the sale of these tokens are taxed between 19% and 23%.
In July, France’s inflation rate reached 6.1%, a comparable figure to the United States. In 1985, the last time, the statistics were as high. Numerous analysts feel inflation has been rising for at least a decade and that the epidemic only accelerated it.
Crisis in Europe and Bitcoin
There is growing doubt whether Bitcoin and cryptocurrencies can efficiently hedge against increasing costs. Despite the extreme volatility of the previous several months, a declining euro and a stronger dollar have the potential to produce significant difficulties for Europeans.
The existing banking system has brought about imminent gas shortages, rising energy costs, and a coming recession, but Bitcoin and cryptocurrencies may provide an alternative. Nonetheless, the persistent energy crisis in Europe poses a danger to a protracted bear market.
The situation might deteriorate if Russia implements planned gas cutoffs, which could plunge some energy-dependent nations in the area into severe economic problems.
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