Amid a massive price correction within the Bitcoin market, Iran’s fiat currency, the Rial, is experiencing an even more significant drop in price. As the market continues to be in a free-fall, investors holding the currency are projected to lose a major portion of their money held in the traditional currency. Moving forward, the loss of viability of the Rial could have several major implications for both the country and the crypto community.
As always, a difficult situation in the fiat market means that more people might be willing to turn to cryptocurrencies. Distrust in the general market has always been an indicator of inclining interest in cryptos, especially considering the deep anti-establishment roots which initially led to the creation of Btcoin and many of the coins which it helped to inspire.
Regardless of the movements of Bitcoin, the impacts of the crash in Iran currency value are far-reaching and significant. Moving forward, the crypto community should look on with interest as the biggest investors and businesses in Russia continue to suffer at the hands of a bear market.
One major element of the problems native to the crisis in Russia is the rampant rate of hyperinflation within the economy. Several factors contribute to the massive problem. For one, the U.S. government has recently applied a plethora of sanctions to the country under the administration of President Donald Trump. Following these sanctions, the country’s currency experienced a significant declining rate wich has persisted since the start of 2018.
For whatever reason, the country’s currency has floundered, experiencing a significant reduction to spending power and inflation rates of over 132 percent. The decline in value happens to coincide with the price dip of Bitcoin which happened at the beginning of the month. The cryptocurrency fell quickly by over 70 percent. Many speculate that the correction may follow the same path of the correction which occurred in 2014, which was the worst the market has ever seen.
To put things into perspective, even the massive dip in price of the Rial is nothing compared to the drop experienced by Bitcoin this year. However, the outlook may be more favorable for the latter than for the former. While Bitcoin is expected to slowly climb its way out of the $5,000 dollar range back into the $6,000 support level, the Rial’s price is predicted to continue to fall over 57 percent.
The Crypto Alternative
The Rial is not alone in its massive hyperinflation and drop in currency value Venezuela has experienced some of the worst currency failings in the world, with their inflation rate skyrocketing to over 30,000 percent. Some within the country have even stopped using the traditional paper money entirely as a result of its uselessness in recent years.
Cryptocurrencies like Bitcoin and Ether provide a way for citizens in failing economies to step outside of the hyperinflation and falling value of fiat currency. Cryptos are known for their immutability to the political conditions that typically change the worth of fiat money.