The inflation rate in the United Kingdom surpassed 10% for the first time in the past 40 years. Local economists warn that the figures could rise to 11% in the following months, driven by soaring food and fuel prices.
What does it mean for Bitcoin, though?
Unseen Inflation in the Last 40 Years
The past few years have been rather problematic for the UK and its economy. At the beginning of 2020, the country left the European Union after 52% of the locals voted in favor of Brexit. It caused numerous short-term complications for the Kingdom, mainly affecting its trade performance compared to other G7 nations.
During the same year, the COVID-19 pandemic also left its mark. The country was among those with the most strict measures aiming to restrict the impact of the health disaster. The government distributed between $350 and $460 billion to stimulate furloughed residents during that time.
Two and a half years later, the effects of mass money printing and the other issues at hand become apparent. According to a BBC report, the inflation rate for September surged to 10.1%, a level not seen since 1981.
In addition to the inflationary issues, the UK goes through a political crisis, too. Earlier this year, Prime Minister Boris Johnson resigned from his post after he and people from his inner cycle were exposed to organizing “wine parties” during the COVID-19 lockdown.
Last month, the Conservative Party elected Liz Truss as the country’s new PM. However, a recent study estimated that approximately 80% of British adults do not approve of her policies, while only 10% have a favorable view of her.
Could the UK’s distressed economic condition have any impact on Bitcoin, though?
Inflation and Bitcoin
Inflation and Bitcoin are often tossed around in the same sentence, where the latter had been created specifically to combat the former.
Over the past year, though, with inflation numbers soaring to highs not seen in decades, Bitcoin has failed to maintain its price. It’s critical to outline, though, that this only relates to Bitcoin’s dollar value or that in any other fiat. One BTC is still one BTC, and the protocol remains robust, secure, decentralized, and immutable as ever.
It’s also true that the current market turmoil across the board represents one of the first major stress tests for Bitcoin and how it performs under these conditions.
Up until this point, increasing inflation hasn’t been fruitful for BTC’s dollar value, and it’s perhaps safe to assume that, barring any major economic shifts, the overall climate is unlikely to change.
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