Australians Embrace Crypto Amid Record Inflation Numbers: Report

Australia’s inflation reached 7.3%, the highest in 32 years. Considering the soaring prices of real estate and gas, analysts expect this number to rise even more before the end of the year.

To preserve their wealth in these turbulent times, locals have shown increased interest in alternative financial assets, including cryptocurrencies.

The Australian government has also put crypto on its agenda. The new prime minister of the nation – Anthony Albanese – promised to enforce comprehensive regulations in the sector while “allowing room for innovation.”

What led to the crisis?

Australia is another country that has to deal with serious economic problems. The nation was almost completely isolated from the rest of the world during the peak of the COVID-19 pandemic. While that reduced the impact of the health disaster and the death toll, it also reduced Australia’s trade volume compared to other states where the rules were not as strict.

To keep the economy going, the country’s central bank printed billions of dollars – an initiative considered one of the main reasons for the current inflation rate of 7.3%. Other factors that have negatively affected Australia are natural disasters that often hit the region.

Massive forest fires destroyed thousands of buildings in 2019-2022, and over 30 people lost their lives. The government spent between 4 and 5 billion dollars to deal with the accident.

Heavy rainfall in 2022 and subsequent flooding in several Australian provinces, including Queensland and New South Wales, added to the problems. Authorities distributed an additional $3 billion to affected households to help them get back on their feet.

“There will be broader cost-of-living relief in the Budget as well, but we have to be very, very careful that any cost-of-living relief that we provide in the Budget does not push up inflation further when Australians are already under the pump,” Treasurer Jim Chalmers warned of the stimulus package.

The other obvious reasons for the 32-year long inflation are the military conflict between Russia and Ukraine and the energy shortage in a number of areas around the world.

Is Bitcoin more attractive now?

Cryptocurrencies, especially bitcoin and stablecoins, have become increasingly popular in countries with high inflation and economic problems. This statement may also apply to Australia, if one observes two separate surveys from 2021 and 2022.

A Finder survey from last year revealed 17% of Aussies had some exposure to digital assets. The company estimates that share has risen to around 23% by 2022. Bitcoin remains the most popular cryptocurrency, while Ethereum, Cardano and Dogecoin are also top choices for domestic investors.

The new ruling party in the nation – the Labor Party – earlier this year gave special attention to digital assets. The Albanian administration said regulation of the sector is a “primary concern.” However, rules must “leave room for innovation.”

The party doubled down on its plans in August, saying it would investigate which cryptocurrencies are the most popular in Australia and oversee them. The initiative, classified as “token mapping”, should see the light of day before the end of 2022.