Just last week, the price of Bitcoin touched a record high in Argentine peso terms after months of inflation in the country.
On the 18th of April, the exchange rate went on to cross 6.59 million ARS, according to the aggregated price data that was tracked by Google Finance. Since this peak, the rate was then corrected to around 6 million ARS, down by 9%, but still up by more than 100% year-to-date.
The growth of this industry in the markets of Argentina does coincide with the continuous devaluation of ARS. For instance, some traders were paying as low as 460 ARS to buy $1 from the black market on the 24th of April- which was more than double the rate of the official spot, which paid 220 ARS for the dollar.
Bitcoin Could Turn Out To Be a Legal Tender In Argentina
One of the consultancy firms based in the United States, FMyA, went on to note that the central bank’s reserves in the South American country had dropped by half to an estimated $1.3 billion since 2019.
This raises the risk of further devaluation of the peso- which has already crashed by 99% from the currency crisis peak of 330 ARS in 2018. This also led to multiple locals seeking haven in the dollar- which had then become scarce due to the rise in demand in this soon-to-be bankrupt nation. On the other side of the spectrum, cryptocurrencies like Bitcoin, which are outside the purview of both the government and the central banks, have emerged as alternatives.
In 2022, a study found that close to 60% of the people in Argentina believed in the ability of Bitcoin to safeguard the value of their savings over a long period. Coinbase, one of the most popular cryptocurrency exchanges, also recommended this cryptocurrency to be a legal tender in the country.