Bitcoin Purchases Hit 20-Month High

Local cryptocurrency exchange Lemon witnessed a surge in Bitcoin purchases, reaching their highest weekly volume in 20 months. This reflects a growing trend among Argentines seeking financial stability amidst a recession and crippling inflation.

Historically, exchanging Argentine pesos for US dollars served as a common strategy to combat economic volatility. However, this method has lost favor recently, coinciding with a 10% appreciation of the unofficial exchange rate compared to the dollar. Conversely, Bitcoin has experienced a near 60% rise against the US dollar within the same timeframe.

Lemon reported a significant increase in user activity, with nearly 35,000 Bitcoin purchases recorded in the week ending March 10th. This doubles the average weekly volume observed in the previous year. Similar trends are evident on other major Argentinian exchanges like Ripio and Belo.

Stricter Monetary Policy Strengthens Peso

A key factor influencing the peso’s recent strength is the government’s stricter control over the money supply. This policy, spearheaded by President Milei, restricts monetary expansion while the central bank focuses on replenishing its US dollar reserves.

Shifting Preferences: From USD to BTC

According to Manuel Beaudroit, CEO of digital wallet Belo, the volume of Bitcoin and Ether transactions has skyrocketed tenfold in 2024 compared to the same period last year. Interestingly, the proportion of stablecoin purchases, typically pegged to currencies like the US dollar, has decreased from 70% to 60%. This shift suggests Bitcoin’s rally is attracting more investors.

Beaudroit explains, “Users tend to buy Bitcoin when they see its value rising, whereas stablecoins are often used for practical transactions and international payments.” With the ongoing Bitcoin surge, Argentines are diversifying their savings, seeking alternative investment opportunities beyond traditional dollar-based strategies to hedge against inflation.

The Argentinian government has further fueled this trend by introducing tax incentives for citizens to declare their cryptocurrency holdings in December 2023.

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The post Argentines Turn to Bitcoin Amid Soaring Inflation, Dollarization Wanes appeared first on Coin Engineer.

Crypto Caves: Argentines Seek Refuge from Inflation in Underground Markets!! As Argentina battles crippling inflation, its citizens are turning to unconventional methods to shield their wealth. Enter the “crypto caves,” clandestine peer-to-peer exchanges offering a lifeline amidst strict currency controls and a plummeting peso.

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These hidden havens, dubbed “non-visible places” by experts, facilitate the purchase of U.S. dollar stablecoins like Tether (USDT). Unlike Bitcoin, stablecoins are pegged to the dollar, offering a hedge against the peso’s volatility. Locals can exchange their pesos for USDT at rates far exceeding the official exchange, a crucial advantage in a country where inflation recently hit a staggering 211.4%.

These “caves” are a modern iteration of Argentina’s historical “financial caves,” which emerged during currency controls in the 1980s. Today, they operate discreetly, offering a much-needed alternative to the official market.

While President Milei’s recent legalization of Bitcoin for contracts represents progress, its high volatility makes it less appealing for everyday transactions. Argentines favor USDT on the Tron network due to its faster processing, lower costs, and 1:1 peg to the dollar, eliminating the need for multiple conversions.

Here in Argentina usually the preferred method of payment is USDT over Tron (if someone sends it), mainly because of lower tx costs. https://t.co/dnSxB2fBJ0

— BowTiedMara (@BowTiedMara) July 15, 2023

However, crypto caves exist in a legal grey area, with some facing investigations and raids. Yet, for many Argentines, they are a beacon of hope in a challenging economic landscape. The future of these caves remains uncertain, potentially fading with relaxed currency controls, but their current significance is undeniable. They represent a stark reminder of the lengths people go to when faced with economic turmoil and illustrate the growing role of crypto in alternative financial systems.

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