Countries with stable economies, like Spain and the United States, are currently suffering from high inflation. The global situation leads experts to predict a global economic crisis that could benefit crypto assets.
A situation breaking the paradigms that people have considered normal now affects the whole world. While countries with long economic stability have recorded historic inflation rates, those with economies in crisis have worse ones.
One of the places raising the most concern is the United States, as its economy affects the international market due to its magnitude. Its year-on-year inflation has reached 7.9% over the last month, a 364% increase in just one year. In February 2021, it only had a year-on-year inflation rate of 1.7%.
The scenario in the United States is similar to what happens in the rest of the world. There is an increase in inflation in various European countries previously known for their economic stability. With a year-on-year rate of 6.4% over the last month, Spain has one of the highest price increase levels.
That situation has caused many people worldwide to seek assets that appreciate over time, like Bitcoin (BTC). They use them to safeguard and increase their savings to overcome the impact of inflation. That is how gold has worked historically in situations of financial instability like the current one.
For that reason, experts like Zoltan Pozsar predict a global economic crisis that could benefit Bitcoin as an asset. Pozsar, an analyst of the Swiss financial institution Credit Suisse, believes it will start next year.
The Crisis Is Worse in Latin America than in the US and Europe
The situation the first-world countries are undergoing is not new to Latin America. People have experienced inflation for years and buy hard currencies to protect the value of their savings.
The context of global inflation allows people from developed countries better understand what Latin Americans have long experienced. However, it is impossible to compare the situation in the region with the rest of the world.
Although inflation has increased in Europe and the United States, they are still far from similar to Latin America. Its year-on-year data on price increases reach two or more figures, showing a significant difference with the most developed countries.
The United States has recorded year-on-year inflation of 7.9%, while Argentina has seen an increase of 4.7% in just the last month. In other words, there was a price increase index of 52.3% year-on-year from February 2021 to February 2022.
Venezuela is facing an even worse situation, as it shows a year-on-year inflation rate of 340%. Therefore, the Latin American country has the highest monthly price increase, although it has lowered it in the last few months.
Argentina and Venezuela are among the places with the highest year-on-year inflation worldwide. The world ranking of Trading Economics places them in the top 8, alongside nations in Asia and Africa. For that reason, they have become two of the countries where people invest most in Bitcoin and other cryptocurrencies.
By Alexander Salazar
