The U.S might have gotten a break from the rising interest rate however everywhere else things are still the same. On the contrary, the inflation rate rose to a new high in four decades. Though both the countries are witnessing people adopting cryptocurrencies in great numbers. But looking at the financial challenges in front of the countries, the question arises will it affect the crypto industry?
What’s Happening in Spain and France?
In July the annual inflation rate in Spain exceeded the market expectation of 10.6%, reaching 10.8%. As per the official data, it is the highest since 1984. A recent report stated that the Bank of Spain believes inflation is currently one of the biggest issues that the country is facing.
It is also likely that inflation might result in further crypto adoption. The popularity of crypto assets has increased even though its adoption in Spain is still less than other developed economies. The National Securities Market Commission (CNMV) has revealed that around 7% of the adults in Spain have invested in crypto. Most of these investors are young, well-paid and educated 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%
The clarity in the space has most probably influenced the uptrend in crypto adoption. Spanish authorities have also given crypto asset legal status in terms of investment. 19% to 23% is the range of capital gains in the sale of these tokens. The situation in France is also quite similar. The inflation rate touched 6.15% in July. It is the highest since 1985.
There are also concerns on whether Bitcoin is a hedge against increasing prices. Moreover, a weakening euro and strengthening euro is creating problems in Europe. Bitcoin can emerge as a solution for an impending recession, gas shortages and high energy prices caused due to the current financial system. It is also important to note that the ongoing energy crisis can trigger a bear trend in the market. On top of that if Russia decides to levy gas-cut offs, some energy-dependent countries can go into deep economic crises.
Source: https://www.thecoinrepublic.com/2022/08/14/inflation-rate-in-spain-and-france-reaches-four-decade-high/