Argentian Peso Continues To Fall While Bitcoin Volumes On The Rise
Argentina's uncontrolled inflation is driving demand for cryptocurrencies and Bitcoin purchases in the country are also on the rise.
Argentina is going through an economic crisis at the moment and Bitcoin has become a safe haven for Argentines looking to preserve wealth.
The country’s uncontrolled inflation is driving demand for cryptocurrencies and Bitcoin purchases in the country are also on the rise.
High inflation rate leads to rising Bitcoin purchases
Argentina has long been regarded as the leading cryptocurrency country in South America, but Bitcoin transactions still remain below expected levels. Recently, things have started to change as the country’s fiat currency, the Argentine peso (ARS), continues to suffer from rising inflation.
The inflation rate has now turned the attention of investors to Bitcoin, which, trading just above the $6,700 mark, makes for a very interesting option for wealth storage.
Despite crashing from a meteoric $18,000, today Bitcoin’s price remains relatively stable when compared to the peso, and many have now turned to cryptocurrencies as they look to protect their funds against runaway inflation.
A large number of new Bitcoin investors are coming from Argentina at the moment, according to D. H. Taylor who is an eminent mathematician and economist.
“I see the push for bitcoin higher being the people of Argentina purchasing and price supporters of BTC. I think this is going to be big. Very big.”
Taylor added that the country needed a solution that is more stable than their fiat currency.
The high demand for Bitcoin has also prompted the Buenos Aires mall to install 12 Bitcoin ATMs. Taylor presented a chart which revealed that Bitcoin trading volume in Argentina has more than tripled over the past few weeks.
Devaluation was expected but not this fast
Despite being one of the richest countries in South America, Argentina has been plagued with inflation over the past two decades.
Between 1998 and 2002, the country underwent an economic depression that came unexpectedly, despite some analysts warning that the currency is overvalued. Many who were unprepared were left in ruin.
This time, investors learned from their mistakes and are increasingly turning to cryptocurrencies.
The government acknowledged the opinion of economists but promised that the devaluation would take place at a slow pace. The government failed to maintain a reasonable rate and in April, the situation took a drastic turn as the peso’s value plummeted.
There were concerns from some investors about the government’s ability to pay its debt, reduce the massive 34% year-on-year inflation, and bring back the value of the Argentine peso.
All the efforts and policies enforced by the country’s apex bank has not yielded any results. Taylor pointed out that the Central Bank could be exploring the option of using Bitcoin as an alternative currency.
Bitcoin the solution for Argentina, Venezuela, and other inflation-ravaged economies
Taylor is of the opinion that Bitcoin is now the best solution for investors in the country.
To ensure that the effects of inflation don’t affect its citizens harshly, the Central Bank has enacted regulations that allow for the deployment of Bitcoin ATMs in the country.
Argentina isn’t the first financially-troubled nation to turn to cryptocurrencies. Bitcoin has proven to be a solution for other inflation-ravaged economies such as Venezuela, Zimbabwe, and others.
Analysts have long predicted that massive adoption of Bitcoin would come in cases of hyperinflation. Venezuela has seen a massive rise in crypto adoption, and Argentina is on a similar path.