High-inflation countries utilize cryptocurrencies such as Bitcoin as a refuge from inflation.

Source: TokenPost Original Title: High-inflation countries turn to Bitcoin and other cryptocurrencies as 'inflation havens' Original Link: In countries with hyperinflation such as Argentina and Venezuela, cryptocurrencies are gaining recognition as a means of preserving assets. Bitcoin and Ethereum are serving as 'digital gold' in regions where access to traditional finance is challenging.

As countries struggle to respond to inflation, in some high-inflation countries, ordinary citizens are choosing cryptocurrency as a primary means of asset preservation.

During the COVID-19 pandemic, governments around the world poured out large-scale fiscal stimulus packages, leading to a significant surge in global inflation. The situation worsened as food and energy prices skyrocketed due to supply chain disruptions and the aftermath of the Russia-Ukraine war.

As a result, major central banks around the world have implemented aggressive interest rate hikes and policies aimed at stabilizing supply chains, and over the past two years, inflation rates have gradually entered a phase of easing. However, some countries are still suffering from hyperinflation reaching three digits.

Countries like Argentina, Venezuela, and Zimbabwe are representative examples, where the annual inflation rate far exceeds 100%. In these countries, where the value of the currency has plummeted, citizens are attempting a 'desperate inflation hedge' through cryptocurrencies such as Bitcoin(BTC) and Ethereum(ETH) instead of their national currencies. With limited access to the US dollar, cryptocurrencies have effectively emerged as the last means of asset preservation.

Some market experts evaluate that “in an environment of extreme inflation, cryptocurrencies are not just speculative assets but are essential living assets.” Particularly, thanks to the characteristics that allow for purchasing, remitting, and storing with just a smartphone and the internet, they are being effectively utilized in areas with limited access to banks.

As cryptocurrencies establish themselves as a global asset class, there is a possibility that demand will continue to expand, particularly in countries vulnerable to inflation. With the advancement of cryptographic technology and on-chain financial infrastructure, this trend may gain even more momentum.

Market Interpretation

Amid global monetary instability, cryptocurrencies are expanding their role as 'digital gold' centered around Bitcoin. In particular, countries where access to traditional finance is difficult are experiencing a surge in demand for alternative assets.

Strategic Points

• Attention to the rising cryptocurrency adoption rate in high-inflation countries
• In addition to Bitcoin, the use cases for accessible cryptocurrencies such as stablecoins and Litecoin(LTC) are increasing.
• Opportunities for related projects or infrastructure expansion in emerging markets in Latin America, Asia, and Africa.

Terminology

• Inflation Hedge: An investment strategy taken to prevent the value of assets from declining due to rising prices.
• Three-digit inflation: An extreme state of price increase where the annual inflation rate exceeds 100%.
• On-chain finance: Decentralized financial transactions conducted directly on the blockchain ( including DeFi )