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Bitcoin’s 150% Surge In Argentina: A Deceptive Triumph Amidst Inflation

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Bitcoin has been making headlines in Argentina with a remarkable surge in value over the past two years when priced in Argentine pesos. However, this impressive performance may not be as spectacular as it seems, as the country grapples with a staggering 300% inflation rate during the same period.

Argentina, a nation of 47 million people, has long been plagued by hyperinflation, largely attributed to failed economic policies and persistent budget deficits. The looming threat of a full-scale currency collapse has kept Argentinians on edge, leading some to explore alternative stores of value like Bitcoin.

According to a recent report, The Argentine government has historically resorted to inflating the money supply through various means, including bank deposits and government bonds. The country’s aggregate money supply M1, comprising currency, demand deposits, and checkable deposits, has skyrocketed from 2.81 trillion pesos in July 2019 to a staggering 10.66 trillion pesos, marking a jaw-dropping 277% increase over three years.

Bitcoin’s Resilience Amid Argentine Economic Challenges

Bitcoin’s price on domestic exchanges surged to 19.6 million Argentine pesos, up from 14.2 million when Bitcoin reached its all-time high in U.S. dollars in November 2021. Investors in Argentina have still managed to accrue gains of 38% when measured in the local currency, even after a 61.5% drop from its peak price of $69,000.

A price gap surfaces when checking Bitcoin’s value in Argentine pesos on CoinMarketCap. This variance stems from Argentina’s intricate official exchange rate system, particularly the “dollar BNA,” regulated by the central bank for governmental dealings and trade, a rate often divergent from a cryptocurrency exchange, leading to this price divergence.

Government efforts to bolster the official Argentine peso rate for stability inadvertently trigger inflation and spawn the clandestine “dollar blue” market. This market is notorious for illicit activities, diminished transparency, and discouraging foreign investment, resulting in volatile exchange rates influenced by market forces and government actions.

Analyzing Bitcoin’s performance on the Bitso exchange in Argentine pesos, it becomes evident that Bitcoin has indeed gained 150% over the two years ending Sept. 21, rising from 7.84 million pesos to 16.6 million pesos. According to a recent report, this gain pales compared to the staggering official inflation rate of over 300% during the same period.

In stark contrast, those who opted for U.S. dollars, whether in traditional form or stablecoins, have seen their holdings increase by 297% during this two-year window, effectively matching the inflation rate. This analysis specifically considers the period from September 2021 to September 2023.

The results may be disheartening for Bitcoin proponents, potentially driving the adoption of stablecoins in the region. However, it’s worth noting that this period has given Argentinian investors valuable lessons about self-custody and the importance of scarcity as the local currency continues to suffer from an ever-inflating supply.

Related Reading:| Bitcoin Network Sparks Intrigue As Block Fullness Reaches All-Time High

Bitcoin Advocate Leads Argentina’s Primary Election Race

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In a surprising turn of events, an Argentinian politician, Javier Milei, known for his fervent support of Bitcoin and calls for the abolishment of the country’s central bank, has emerged as the frontrunner in the presidential primary elections. With over 90% of the votes tallied, Milei’s libertarian pro-Bitcoin stance has garnered him nearly 32% of the vote, positioning him ahead of the conservative Together for Change party and the ruling Union for the Homeland coalition, according to Bloomberg data.

Milei’s rise to prominence underscores the growing influence of cryptocurrency ideologies in the realm of politics, as his Liberty Advances coalition, often described as having libertarian and far-right leanings, champions the ideals of decentralization and limited government intervention. Milei’s self-proclaimed identity as an anarcho-capitalist aligns with his controversial calls for the abolishment of Argentina’s central bank, which he labels a “scam,” and his denial of global warming’s existence.

Central to Milei’s message is his vehement criticism of traditional fiat currencies and their susceptibility to manipulation by politicians. He presents Bitcoin as a direct response to the alleged deceit of “central bank scammers” and argues that legal tender facilitates political exploitation of the public through inflation. This rhetoric resonates strongly in Argentina, where the crippling annual inflation rate of 116% has catapulted the nation into its worst cost of living crisis in decades.

Bitcoin’s Role in Reshaping Economic Solutions

Milei’s ascendancy brings to the forefront the notion that cryptocurrency could potentially offer an alternative solution to the financial turmoil that plagues economies like Argentina. Bitcoin, with its decentralized nature and limited supply, challenges the traditional monetary status quo by offering a hedge against inflation and political interference. Milei’s popularity signals a voter base’s growing willingness to embrace cryptocurrency’s disruptive potential in addressing economic woes.

However, while Milei’s message resonates with a significant portion of the electorate, his candidacy also faces skepticism and controversy. The radical nature of his views, including his advocacy for legalizing human organ sales, raises concerns about his ability to govern effectively and inclusively.

As Argentina’s general presidential election looms on October 22nd, the spotlight remains on whether Milei can maintain his momentum and garner the necessary 45% of the vote to secure the presidency outright. Should he fall short, the prospect of a runoff election in November becomes a significant consideration.

In conclusion, the meteoric rise of Javier Milei and his Bitcoin-centric campaign underscores the growing influence of cryptocurrency in shaping political discourse, particularly in economies grappling with financial instability. Whether Milei’s message ultimately translates into a new era of governance or merely represents a political outlier, his candidacy exemplifies the increasing relevance of digital currencies in the global political landscape.

Bitcoin Soars as Argentine Peso and Turkish Lira Falter

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Bitcoin seems to be roaring across nations. The national currencies of Argentina, Turkey, and Egypt have experienced a consistent decline against the U.S. dollar. The Argentine Peso has been unable to recover its losses over the past year, with a continuous downward trend evident on the charts. On the other hand, the Turkish lira managed to stabilize temporarily towards the end of 2022 and in the initial months of this year, but this trend was short-lived.

Recently, these currencies have witnessed a series of significant declines, often represented by long red candles. Interestingly, the Turkish lira has gained attention and earned the nickname “suppressed lira” by some individuals. In comparison, the Egyptian pound seems to be in a relatively better state than the other two currencies. After a volatile second half in 2022 and a bearish start to 2023, the Egyptian pound is currently consolidating. Factors such as post-Covid effects, rising inflation, political challenges, and macroeconomic instability have all contributed to the devaluation of these three currencies.

Meanwhile, Bitcoin’s value has surged against the Argentine peso, Turkish lira, and Egyptian pound amidst this accelerated devaluation. In fact, Bitcoin has already reached an all-time high in Argentina and Turkey, trading at 8,082,591 ARS and 803,075 TRY respectively. However, in Egypt, the price is on the verge of surpassing its previous peak and establishing a new record, with one Bitcoin valued at approximately 948,976 Egyptian pounds on June 12th.

Contrasting Sentiments in Turkish Bitcoin Exchanges

In Argentina, the trading volumes of cryptocurrencies have experienced a sharp decline over the past week. Initially, these volumes reached their peak on the top two local exchanges but gradually diminished. Recently, the trade volumes on these platforms amounted to around $15.7 million and $21,400 respectively.

Source: CoinGecko

In Turkey, where Bitcoin also reached an all-time high, the situation is slightly different. Weekly improvements in trading volumes have been observed on two native exchanges, while the other three exchanges have not displayed such remarkable trends. This divergence suggests a divided sentiment within the community. Over the past day, trading volumes on these platforms ranged between $50 million and $172,500.

Bitcoin Price Surges to $31K: Hitting High In 3 Countries

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According to TradingView data, BTC price changes have been concentrated around annual highs.

The price of bitcoin held steady over the weekend as attention was drawn to geopolitical developments in Russia and its neighboring countries.

As the day went on, tensions decreased, but interest in how the markets would respond on June 26 at the open persisted. The weekly candle close, which is already a well-known source of volatility, was the first to react.

Popular trader Rekt Capital has identified the “most bullish scenario” for the weekly closure over the crucial $30,000 threshold.

Mid-April saw BTC reject the $30,000 resistance. A second post was made over the weekend; let’s see if $BTC can convert $30,000 into support.

Trader friend Crypto Should Bitcoin successfully consolidate near $31,000, Tony remained optimistic for a move to $32,000 in the near future.

Michal van de Poppe, the founder and CEO of the trading firm Eight, expressed some uncertainty about the bulls’ capacity to maintain their momentum.

He tweeted, “Bitcoin made a nice high, through which it swept the yearly high.”

“I’m unsure whether we’ll continue running from here, but during uptrends you’ll most likely see price continuing to run rather than have deep corrections. If we have a correction, $28,500 I buy.”

In order to “buy the dip” below $30,000, Van de Poppe reiterated a common downside goal among investors.

BTC/USD annotated chart. Source: Michaël van de Poppe/Twitter

Bitcoin Sets New Records In 3 Countries

Despite a decline in volatility relative to the US dollar this week, Bitcoin nevertheless managed to break records in three different nations.

The value of BTC in relation to local currencies reached record highs in Argentina, Venezuela, and Lebanon.

That pattern has persisted for those nations into 2023 as macroeconomic policy decisions and inflation rapidly reduce buying power.

The BTC/TRY pair was getting close to the location of its blow-off peak from December 2021 in Turkey, as the lira tumbled to new lows against the dollar.

Bitcoin Futures Secures Entry In Latin America

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For the first time in Latin American history, the Bitcoin Futures Index has received regulatory approval in Argentina.

Local media reports stated that the BTC futures contract would initially start trading in May on the Matba Rofex exchange after receiving approval from the National Commission of Value [CNV], the country’s securities regulator.

According to the post, the aforementioned index will be calculated using data on the price of Bitcoin provided by various price sources, organizations that support the functioning of the BTC / ARS pair, and deposits of Argentina pesos made by bank transfer.

The regulator’s approval is part of a strategic innovation goal that was established in the first quarter of 2022, the article read.

…intends to adapt to the regulatory challenges imposed by new technologies for the provision of financial products. As well as promoting the development of new and innovative products by its regulated subjects in the capital market.

Also, CNV established the requirements for exchanges for the nation’s provision and usage of payment services.

Exchanges based in Argentina must have a working agreement with a payment services provider or PSP that is authorized by the BCRA, the Central Bank of the Argentine Republic.

By trading derivative goods under-regulated market infrastructures, qualified investors will be able to have exposure to Bitcoin price fluctuations in a secure and transparent manner, it stated.

Moreover, CNV has asked its authorized crypto trading platform Matba Rofex SA to include alerts intended for the investing public that warn about the dangers of this activity and potential outcomes in the conformation of said instrument.

Amidst the nation’s soaring inflation, its peer-to-peer Bitcoin trade volume has risen to new heights. This opens a wide range of opportunities for crypto assets as people tend to seek out a better store of value.

Many advocates of crypto even argue that this is a counter-inflationary asset.

Bitcoin’s Addition Will Revolutionize Developing Economies

The biggest digital asset exchange in the world, Binance, recently announced plans to increase its presence in Argentina. The post claimed that Binance will make it possible for Argentinians to buy and sell digital assets using their own pesos.

The news holds significance for the inflation-stricken Argentina peso and demonstrates the necessity for a decentralized, crypto-based financial system to better control inflation.

There is a growing push to remove reliance on inflated local currencies in favor of a crypto-based financial system as developing economies like Argentina struggle with economic issues brought on by ineffective central bank policies.

Stablecoin Purchases in Argentina Seem to Have Tripled Amidst Economic Crisis

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Investors in Argentina bought two to three times as many stablecoins over the weekend compared to the average, according to the country’s crypto firms. This is following the departure of Argentina’s economic minister, Martin Guzmán, on Saturday amid an economic crisis.

The Argentine peso (ARS), whose purchasing power has fallen over the previous year as inflation has soared, is reportedly under threat of devaluation, according to three major cryptocurrency exchanges.

The peso lost value against the stablecoins DAI and tether after Guzman’s departure by roughly 15% on the platforms of many major local exchanges.

From ARS 245 on Friday to ARS 280 during the weekend, both stablecoins increased in value. Tether quotes on Argentine pesos have dropped after Silvina Batakis was appointed as the country’s new economics minister late on Sunday.

Inflation in Argentina rose by over 60% year after year

Guzmán’s departure is the latest repercussion of a dispute between Argentine President Alberto Fernandez and Vice President Cristina Fernández de Kirchner over the country’s economic course, which led to a 60 percent increase in inflation in May compared with the same month last year.

Additionally, the central bank of Argentina is running low on foreign exchange reserves, which has a negative impact on imports, among other things.

According to the corporation, “many people” used their DAI as collateral to secure loans in Argentine pesos and buy more DAI as insurance against a prospective peso depreciation. The Argentine exchange Buenbit reported a 300 percent spike in trade on Sunday compared to the same day in prior weeks.

According to many local media sources, the government might declare a foreign exchange break on Monday to soothe markets. Most Argentine exchanges boosted the margins between the bid and ask prices to 18%, while normally they are under 2 percent, as a result of the absence of price references for the U.S. dollar over the weekend.

Central Bank of Argentina Asks Banks to Stop Crypto Offerings

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Just days after Argentina’s two banks announced that they had opened up crypto trading to their customers, Argentina’s central bank (BCRA) announced that financial institutions cannot allow their clients to conduct transactions using digital assets.

Banco Galicia, a significant private bank, and Brubank, an all-digital bank, both stated on May 2 that users would be able to trade cryptocurrency through their investing portals on their websites.

However, because crypto assets are not regulated, the central bank has stated that financial institutions in the nation cannot offer this type of service.

“A digital representation of value or rights that is exchanged and stored electronically using Distributed Ledger Technologies (DLT) or other comparable technology,” according to Argentina’s central bank.

Argentina’s banks recently opened up crypto offerings

The central bank statement adds, “The action imposed by the BCRA Board of Directors strives to limit the risks connected with activities with these assets that might be produced for consumers of financial services, and for the financial system as a whole.”

Some Argentines have adopted crypto as a tool to more easily preserve money while dealing with the country’s high inflation rate, as well as the currency restrictions reintroduced by its current president, Alberto Fernández, in 2019.

However, as part of a roughly $45 billion debt restructuring arrangement with the International Monetary Fund, Argentina’s government said in March that it would prohibit the usage of cryptocurrencies (IMF).

The government said in a March 3 memorandum that it would “discourage the use of cryptocurrencies with a view to avoiding money laundering, informality, and disintermediation,” among other actions aimed at bolstering the country’s financial resilience.

The shift in focus from last May might be linked to the International Monetary Fund’s (IMF) $44 billion extended loan plan, which included a condition requiring Argentina to “discourage the usage of cryptocurrencies.”

The central bank’s statement contradicts the plans of the mayor of Argentina’s metropolis, Buenos Aires. Mayor Horacio Rodrguez Larreta revealed plans to digitize the city in late April, including proposals to enable inhabitants to pay their taxes in cryptocurrency and other blockchain initiatives.

Argentina’s Banking Giant Welcomes Crypto Trading

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Argentina’s largest private bank Banco Galicia with a market cap of nearly $1.3 billion, has finally added the option to trade cryptocurrencies on its platform. As per a Monday announcement, the financial firm will allow users to buy and sell Bitcoin [BTC], Ether [ETH], USDC, and XRP.

Banco Galicia has collaborated with Lirium, a Liechtenstein-based crypto product for digital wallets and mobile banking apps.

Sources also revealed that for the time being it is offering users the ability to buy and sell crypto, but not allowing them to withdraw or send crypto, Lirium COO Martin Kopacz said, adding that the bank also offers a custody feature.

Banco Galicia plans to launch the service to all of its customers by mid-May, Kopacz noted.

Stakeholders lending support to Argentina’s biggest crypto development

In order to facilitate crypto trading and custody service, Lirium has partnered with OSL, a Hong Kong-based digital asset trading platform that began operating in Latin America last October.

Lirium is also working with four Argentinian financial institutions that plan to unveil a crypto trading service, Kopacz said, without disclosing dates. Apart from that, Lirium is working on similar integrations in Brazil and Mexico, according to Kopacz.

Reasons behind Argentina’s exponential crypto growth

In frontier markets like Argentina, cryptocurrency has skyrocketed. The nation marred by an unstable financial system and strong government intervention in the country’s economy has driven Argentines to seek solace in digital assets, according to a new report from the BBC.

The highly volatile Argentine peso, the country’s national currency, has been subjected to a range of financial controls that make the everyday citizens’ basic life essentials like buying and investing with the currency, increasingly difficult.

Amid this chaos and uncertainty, cryptocurrency has enjoyed a steady boon. Data from Chainalysis showed that Argentines earned $1.86 billion in cryptocurrency in 2021.

So far, the government has taken a relaxed attitude to the cryptocurrency boom. Recently it rolled out a so-called “innovation hub” to bolster fintech and cryptocurrency startups in a regulated manner.

The latest addition by the country’s largest bank to allow crypto is certainly a good start towards encouraging user adoption.

Bitcoin’s Lightning-focused app Strike hits Argentinian shores

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Bitcoin’s Lightning-powered payment app, Strike, announced its launch in Argentina to offer what it claims to be a superior financial experience in a country that has one of the world’s highest adoption rates for cryptocurrencies. The recent development further advances Strike’s mission of building a ‘more connected financial world.’

According to the press release, Strike would facilitate day-one access to a wide range of use cases such as instant and near-free remittance payments, accepting and sending bitcoin Tips on Twitter, and peer-to-peer transactions. On Strike’s future expansion plans the P.A read,

Strike has begun working with merchants, consumers, and individuals in Argentina, launching initial integrations and activations in San Martin de Los Andes. Since the launch in El Salvador less than one year ago, Strike has quadrupled its Latin American team to expand in Argentina, and it is targeting a continent-wide expansion of its team and of the app. Strike will continue to launch in more countries throughout the year, with a focus on Brazil, Colombia, and other Latin American markets and plans for other regions throughout the world.

Strike would be available on the App Store and Google Play Store in Argentina. Besides that, it also enables anyone with a Twitter account within the accepted countries to receive and to send Tips to anyone. According to the payment firm, this is a cheaper and faster global alternative to traditional bank or card networks. In addition to Argentina, Strike is available in most U.S. states and El Salvador.

El Salvador’s adoption -the first Bitcoin national project

Having said that, the world’s first national Bitcoin project has been El Salvador’s adopting BTC as legal tender back in September 2021. Previously, El Salvador‘s Finance Minister Alejandro Zelaya said that the government is planning to send around 20 bills related to the Bitcoin bonds to Congress for its approval. The bills aim to cover financial markets and investment in securities to provide a legal foundation for issuing the bonds, he told a local TV. “This is to provide a legal structure and legal certainty to everyone who buys the Bitcoin bond,” Zelaya added.

Argentina’s President is interested in Bitcoin but the central bank remains skeptical

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The crypto-verse has garnered interest from several people across the globe. The President of Argentina is the latest one to hop onto the crypto bandwagon.

Bitcoin [BTC] went from being a currency associated with the dark web to one of the most sought-after assets. This transition was lauded by many and the rapid surge in the value of the king coin was one of the primary reasons behind this. Officials of different governments across the globe were initially extremely hostile towards Bitcoin and other cryptocurrencies. However, with time the highest authorities of certain countries have been expressing interest in the crypto market.

Argentina President Alberto Fernandez in a recent interview revealed his inclination towards cryptocurrencies. Crypto assets weren’t his only topic of interest, he also noted that he was willing to explore the prospects of a central bank digital currency [CBDC].

Argentina heading towards the crypto-verse?

El Salvador’s crypto-friendly move has left an array of other countries under the pressure of doing the same. While the Argentina President affirmed that the country wouldn’t “go too far out on a limb,” he pointed out that there are no other reasons to say “no” to it either.

Argentina’s inflation issue has been alarming and has persisted for the longest time. While the government deals with that, the inclusion of crypto into its system could go either one of the ways.

Additionally, speaking about the crypto industry, Fernandez stated,

“There is caution because of how unfamiliar it is, and because it is hard to understand how this fortune materializes. Many people in the world have these concerns, and that is why the project, or the system, has not yet expanded [more than it has]. But it is something to consider.”

Alongside this, the head of Argentina’s central bank, Miguel Pesce suggested that cryptocurrencies could pose a threat to the stability of the existing economic system. He also shot down rumors about the country’s plunge into the CBDC space.