In Argentina, the demand for Bitcoin has reached its highest level in nearly two years as the Argentine peso (ARS) continues its steep decline against the US dollar. This surge in Bitcoin purchases is a direct response from Argentines seeking to preserve their savings against the backdrop of a weakening national currency.
The Argentine Peso's Decline
Over the past year, the value of the Argentine peso against the US dollar has dropped significantly, from 0.0049 USD per ARS in March 2023 to just 0.0012 USD currently. This dramatic devaluation has propelled Argentines to look for more stable investment options to protect their wealth.
Bitcoin as a Preferred Option
According to Bloomberg's report citing data from Lemon Cash, a cryptocurrency exchange in Argentina, nearly 35,000 customers bought Bitcoin in the week ending March 10. This figure is double the weekly average seen throughout 2023. The report highlights not just Lemon Cash but also other major exchanges like Ripio and Belo witnessing similar trends in increasing Bitcoin demand.
The Shift to Cryptocurrencies
Manuel Beaudroi, CEO of digital wallet Belo, noted a shift in the purchasing behavior of Argentines. While stablecoin purchases dropped from 70% to 60%, Bitcoin and Ether volumes saw a tenfold increase in early 2024 compared to the same period in the previous year. This shift is attributed to Bitcoin's recent price surge, making it more attractive to investors compared to stablecoins, which are typically used for transactional purposes or making payments abroad.
The Role of "Crypto Caves"
Despite the apparent surge in demand for cryptocurrencies through official channels, a Cointelegraph report from February 12 suggests that Argentines are also turning to black market exchanges, or "crypto caves," to buy USD stablecoins. This trend is driven by the desire to circumvent strict currency controls and hedge against the ARS's inflation.
Cryptocurrency in Everyday Transactions
The adoption of digital currency for everyday transactions is gradually increasing in Argentina. Following a decree aimed at economic reform, which allows the use of Bitcoin and other cryptocurrencies under specific conditions, a landmark event occurred where a rental agreement in Rosario was settled with Bitcoin payments for monthly rent.
Conclusion
Argentina's ongoing economic challenges, characterized by the peso's devaluation, have led to a significant shift towards cryptocurrencies, especially Bitcoin, as a means of preserving wealth. This trend underscores the growing importance of digital currencies in economies facing financial instability and inflation.
