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Last week, Bitcoin’s (BTC) price achieved an unprecedented high in Argentine peso (ARS) terms due to ongoing inflation in Argentina.
Argentina’s inflation drives BTC’s price to unprecedented levels
On April 18, the BTC-to-ARS exchange rate surpassed 6.59 million ARS, based on aggregated price data monitored by Google Finance.
Following this peak, the rate has adjusted to approximately 6 million ARS, reflecting a 9% decrease, yet it remains over 100% higher year-to-date (YTD).
BTC/ARS price performance so far in 2023. Source: Google Finance
Bitcoin’s rise in the Argentine market aligns with the ongoing devaluation of the ARS. For example, on April 24, traders were exchanging as low as 460 ARS for $1 on the black market—more than double the official exchange rate, which is 220 ARS for the dollar.
FMyA, a consultancy firm based in the United States, reported that the reserves of the Argentine central bank have halved to an estimated $1.3 billion since 2019.
This situation has heightened the risks of further peso devaluation, which has plummeted nearly 99% from the currency crisis peak of 330 ARS in 2018. Consequently, residents are increasingly seeking refuge in the dollar, which has become limited due to rising demand within the country.
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ARS/USD price performance since 2004. Source: Google Finance
Simultaneously, Bitcoin and other cryptocurrencies that operate outside the control of governments and central banks are increasingly being viewed as alternatives. For instance, data indicates that Bitcoin’s peer-to-peer weekly volume in Argentina reached a record high of nearly $30 million in March on the Paxful exchange.
Bitcoin weekly volume in Argentina. Source: Paxful/CoinDance
Additionally, a study conducted in 2022 revealed that nearly 60% of Argentines trust Bitcoin’s capacity to preserve the value of their savings over the long term. The popular U.S. cryptocurrency exchange Coinbase has also suggested that BTC should be recognized as legal tender in Argentina.
Bitcoin gaining popularity in Argentina
Earlier in April, the National Commission of Value (CNV), Argentina’s securities regulator, authorized a Bitcoin-based futures index on the Matba Rofex exchange, which is set to launch in May. This derivative, settled in pesos, will allow accredited investors to gain exposure to the Bitcoin markets.
Related: Latin America is ready for crypto — Just integrate it with their payment systems
Furthermore, a recent proposal from the Ministry of Economy requested citizens to declare their cryptocurrency holdings and offered incentives through tax benefits. Additionally, in December 2022, an Argentine province expressed its plans to issue a dollar-backed stablecoin.
This article does not provide investment advice or recommendations. Every investment and trading decision carries risk, and readers should perform their own research before making any decisions.
