Bitcoin (BTC) and other cryptocurrencies are becoming more popular as superior alternatives to fiat money as inflation in the Eurozone soars.
The euro zone’s interest rates rising
The European Central Bank (ECB) Governing Council announced last Thursday that it will be increasing the euro zone’s benchmark interest rates by 0.5 percent. after a first in 2011. The organization cited its goal to return rising inflation to its target objective of 2 percent in the medium run as justification for this choice.
The interest rates for the primary refinancing operations, the marginal lending facility, and the deposit facility will therefore be increased to 0.50 percent, 0.75 percent, and 0.00 percent, respectively, as of next July 27.
This is a chance for the ECB to reconsider its monetary policies. And to accomplish this, the ECB has unveiled a brand-new “transmission protection mechanism” that will ensure the efficient and progressive implementation of this new approach. The commission also stated that during the upcoming consultations, the normalization of the rates will change.
Comparing Runaway Inflation to Cryptos
There is legitimate cause for alarm, according to data from Eurostat, the European Union’s (EU) statistical office. In June 2022, the annual inflation rate for the euro area rose to 8.6 percent from 8.1 percent in May. It was roughly 1.9 percent a year ago. In June 2022, it was 9.6 percent for the European Union, up from 8.8 percent the month before. Prior to that, it was 2.2 percent.
On the other hand, cryptocurrencies have the unique property of being exceedingly resistant to inflation. In fact, a preferable haven against the decline of fiat currencies is the rise of digital assets like bitcoin. To do this, they rely on a few guiding principles, including scarcity, a steady decline in supply, and resistance to governmental interventions like interest rate adjustments or an unsustainable expansion of the money supply.
A price fall is also frequently caused by the volatility of cryptoassets, but on an annual basis, this is still far less than the losses caused by the rates described above.
Inform people that inflation is a cancer. It affects people at all social levels, from families to corporations, from the wealthy to the less fortunate. The best treatment, like with other cancers, is prevention. In order to prevent this, it may be necessary to think about investing in transparent, autonomous assets that only respond to the law of supply and demand.
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