After the COVID-19 pandemic, the need for financial protection caused the boom for cryptocurrencies in Spain. Inflation and the shortage of commodities lead citizens to turn to Bitcoin as an alternative to fiat money.
Enrique De los Reyes, a representative of Spanish cryptocurrency exchange Bitbase, recently talked about the success of Bitcoin. He said that the growing financial needs of citizens contribute to the massive adoption of the cryptocurrency.
In 2020, the COVID-19 pandemic caused anxiety about protecting material goods among the population. More than five million Spaniards have adopted Bitcoin and other cryptocurrencies as an alternative to fiat money.
Those numbers indicate that there is evident demand for cryptocurrencies in Spain. The increase in the prices of goods and the devaluation of the euro (EUR) has led citizens to seek financial alternatives. That has been an unprecedented event in a country where people did not worry about their finances.
De los Reyes stated that Spain is a longer-lived population that does not worry about its economy or finances. He commented that Spaniards always remain linear, given the economic security provided by the euro. Since they were the fourth largest economy in Europe, there were few reasons for citizens to seek refuge in Bitcoin.
However, the situation has changed since the euro has undergone significant devaluation and the European Central Bank has printed a large amount of money. Those factors would create a crisis that would cause Spaniards to stop thinking linearly and turn to Bitcoin.
The representative of Bitbase considers that the countries with the worst crises are the best to adopt cryptocurrencies. He thinks crypto businesses have more opportunities when citizens need new alternatives.
Other Countries besides Spain Prove the Crisis Hypothesis
De los Reyes saw the crisis trend as a catalyst for the growth of cryptocurrencies in Venezuela. By 2017, the worst time of the economy in the South American country, there was a boom in adopting Bitcoin and other crypto assets.
Hyperinflation, a shortage of commodities, and a highly restrictive exchange market made the quality of life of Venezuelans decline. However, the cryptocurrency industry did not suffer the economic effects and grew with new miners, users, and companies accepting crypto assets as payment.
Even though the country was doing poorly, the adoption of Bitcoin was successful at that time. The same happens in different countries facing a weakened monetary system and a discouraging economy. Citizens seek ways to protect their income and take risks with new alternatives.
Spain and Venezuela are not the only ones, as the crisis has also favored Bitcoin in Argentina, Nigeria, and Zimbabwe. The devaluation of the Nigerian fiat currency and inflation led to such high use of Bitcoin that the government banned it. In desperation, people from that West African country consulted the word Bitcoin on Google searches at historical levels.
Bitcoin is trading at around USD 44,741 and has accumulated a 6.0% gain in the last week. Its daily trading volume is above USD 24.91 billion, and its market capitalization is about 842.10 billion, according to CoinGecko.
By Alexander Salazar
