Here’s Why the Crypto Market is Still Vulnerable to Stagflation

The crypto market has acquired significant momentum during the past decade as major brands and new users enter the digital industry. Despite being a stable and reliable system, cryptocurrencies have faced tough times but have still pulled through. An important question is whether the crypto market is vulnerable to stagflation. Stagflation was a household phenomenon when the United States was taken off the gold standard by former President Richard Nixon. Stagflation is an acute situation where inflation rates surge above anticipated scales in an economy. In such an event, unemployment rates surge significantly, in the long run proving to be detrimental to the economy. Future Stagflation Stagflation has recently become a hot topic among investors, and it is a looming threat to the global economy. An example of such an event was when the Standard & Poor 500 Index of US stock averaged at +2.5%, but during stagflation, it was a 2.5% decline. Stagflation is a reality considering that the positive correlation between crypto and NASDAQ keeps getting tighter. The ever-growing popularity of crypto and the blockchain industry has created high demand for digital assets. Moreover, stagflation has been linked to declining profit margins, when companies face dwindling sales and higher prices. During such an event, the demand for digital assets will increase. If the rates increase and the economy slows, asset prices will decline, including cr...