32-year high inflation has Australians flocking to Bitcoin
The inflation rate in Australia has reached a 32-year high. Australians appear to be moving to Bitcoin (BTC) to hedge against inflation, according to P2P Bitcoin trading volumes.
Australians are flocking to bitcoin and cryptocurrencies as the country sees inflation rates hit a 32-year high. Last quarter, the consumer price index increased by 1.8%, according to the Australian Bureau of Statistics. That brings the annual inflation rate to 7.3%, which is the highest it has been since 1990.
Australia Inflation Rate: tradingeconomics.com
As this rate of inflation has increased, Australians have turned to Bitcoin to protect their wealth. P2P trading volume for the asset has risen in recent quarters. Q3 2022 volume is up 15% from the previous quarter, while it is up 27% year-over-year. Correspondingly, the second quarter of 2022 had an increase of 31% year-on-year.
These numbers are especially important given the bear market the crypto asset class has been through this year. Australians are clearly willing to put some of their wealth into bitcoin to hedge against inflation. Although this narrative has lost some of its weight in recent months, it has not completely disappeared.
Bitcoin still seen as an inflation hedge
The rate of inflation in Australia is causing concern among experts. The Reserve Bank of Australia (RBA) had expected the inflation rate to peak at 6%. Analysts believe this quarter will see even worse numbers in core and headline measures. As such, the RBA can introduce rate hikes, which are already taking place in many countries.
Since May, the RBA has increased interest rates by 250 basis points, a significant figure. At a time like this, the rise in bitcoin trading means Australians are looking to the crypto market as a place to keep their money safe.
Australia is working on crypto regulations
While Australians have increased their positions in Bitcoin, the government has stepped up its game on crypto regulations. The Australian Department of Finance released a statement in August saying it had begun work on crypto asset reforms. It claims that this regulation would be unlike anything “anywhere else in the world”.
One of the reasons why the government is speeding up the work on regulations is because of the use of crypto in criminal activities. The Federal Law Enforcement Agency believes this is a growing threat, as do many other law enforcement agencies. Australia’s securities regulator also suspended three crypto funds by Holon recently.
Meanwhile, Australia has published a CBDC whitepaper and released details of a pilot program. The government is very keen to exploit the technology and the pilot will last for one year.
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