Inflation in Germany hit double digits for the first time since WWII according to the most recent CPI data. The most recent CPI reading shows a 10% inflation y/y when in August it was just 7.9%. The situation seems to be getting very difficult for German households which have been reducing expenditures for several months now. Some analysts have also shown that people are moving away from currencies such as the GBP or the EUR and purchasing Bitcoin (BTC).
Inflation in Germany Hits 10%
Inflation in Germany has reached its highest level since WW2 according to the most recent CPI data released. Analysts show that the situation is becoming quite difficult for households as prices continue to move higher and there does not seem to be an end to the energy crisis, which could be just starting ahead of the winter in Europe.
Let’s not forget that Germany is the largest economy in the European Union (EU) and one of the largest in the world. Therefore, what happens to Germany would definitely affect other countries, especially in Europe.
The European Central Bank (ECB) is going to take a decision on whether to keep interest rates low, or increase rates and affect the current debt crisis that could be getting ready to explode in other European countries like Italy. Hence, there is a very difficult situation for the European market that could end up in a bigger crisis.
For example, the EUR has also reached the lowest level in 20 years against the US dollar (USD), showing the current weak situation in which the Eurozone finds itself.
GBP Falls to Record Lows
But the problems are not just in continental Europe but also in Great Britain, where the GBP has reached its lowest price in history against the USD. The GBP reached an all-time low on Monday as a new budget was unveiled.
As we can see, the crisis has affected not only Germany and the Eurozone as a whole but also Great Britain, which decided to leave the European Union in order to be able to manage its economy and country with more flexibility.
Bitcoin as a Store of Value
The current situation in financial and forex markets has pushed investors towards other currencies and Bitcoin, Volatility has been high in recent months, and it could continue in this way in the near future considering the winter is getting closer and the energy crisis seems to be getting even worse.
Dunleavy, Senior Research Analyst at Messari Crypto, released a report in which he shows how investors are moving from EUR and GBP towards Bitcoin, the largest cryptocurrency in the world.
(1/6) If your currency was rapidly depreciating what would you buy to protect your purchasing power?
The answer for Euro and Pound holders has overwhelmingly been #Bitcoin
This is notable because we did not see the same trend in previous crises in 2020 or 2021
A brief 🧵 pic.twitter.com/rJvWGORFqz
— Tom Dunleavy (@dunleavy89) September 28, 2022
On that matter, he wrote on Twitter:
“Is the hard money thesis of Bitcoin playing out before our eyes? Probably not. But this flight to Bitcoin is an interesting development and could be one stepping stone towards BTC being considered hard money.”
Let’s not forget that Bitcoin maximalists believe that Bitcoin could become a store of value in the future. Despite volumes increasing in BTC during the most recent volatility in FX markets, this could be related to a trend that gets repeated with other trading pairs in the FX market.
According to data shared by CoinGecko, Bitcoin is now being traded at around $19,200 and it has a market capitalization of $368 billion. In the last 7 days, Bitcoin remained relatively stable and it could continue to move higher if the market changes its macro trend (something that might not happen in the short term).