The demand for Bitcoin is driven by various geopolitical and economic factors. Few events influencing the increasing demand for Bitcoin in recent times include Greek economic crisis, Brexit, falling Chinese yuan, US presidential elections, demonetization of the Indian rupee, Venezuelan economic meltdown and more. Brazil may soon join the list following the implementation of the new constitutional amendment.
The implementation of a new constitutional amendment will effectively freeze the government’s spending on various essential public benefit programs including healthcare, education, pensions, infrastructure and defense. These conditions are expected to prevail until 2037, which may lead to increased inflation and economic hardships to the Brazilian population.
The effectiveness of a follow-up stimulus package to make up for the economic slowdown is yet to be gauged. As the government tries to put a cap on its spending to strengthen the economy, it may soon introduce few strict reforms that may obstruct free movement of Brazilian real within and across the borders. These potential reforms combined with weaning faith in the country’s government can potentially turn Brazilians towards Bitcoin as an alternative to the country’s legal tender.
The Brazilian leadership intends to counteract the negative influence of its newly introduced austerity by writing off taxes for certain entities and making allowance for paying debts in installments. Even the banking and financial companies will be directed to reduce the time taken for various operations while reducing fees.
As of now, Brazil looks promising to the Bitcoin sector, but it comes at the cost of economic hardships to the country’s population. Based on the new developments, the coming year, 2017 may turn out to be a really good year for Bitcoin with price crossing $850 in the first few months. Alongside Brazil, India and Venezuela are two other promising markets with a huge growth potential.