Faced with outstanding inflation of up to 276% in Argentina, individuals are gradually turning towards Bitcoin as a means of protecting their assets instead of the traditional option of exchanging pesos for dollars. The change marks a break with a long-standing tradition that has made Argentina a leading destination for dollarization amid economic uncertainty.
Bitcoin purchases in Argentina hit a 20-month high at Lemon, a popular local cryptocurrency trading platform. The increase reflects a growing trend of Argentines seeking financial stability amid an economic downturn and one of the highest inflation rates in the world.
Traditionally, converting pesos to dollars was considered a way to prevent economic fluctuations, but now this method is no longer as popular as before. This change coincides with a 10% increase in the commonly used exchange rate against the dollar. In contrast, Bitcoin has gained nearly 60% against the greenback over the same time period.
Lemon exchange recorded a significant increase in customer transactions, with nearly 35,000 Bitcoin purchases made in the week ending March 10, double the weekly average in the previous year. Similar trends were observed at other major exchanges in Argentina, such as Ripio and Belo.
A key factor that has contributed to the peso’s recent strength is Milei’s tight control over the money supply, preventing its expansion while the central bank replenishes US dollar reserves.
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Meanwhile, according to Manuel Beaudroit, CEO of digital wallet Belo, Bitcoin and Ether trading volume increased tenfold in 2024 compared to the same period last year. He highlighted that the share of purchases of stablecoins, often linked to currencies such as the US dollar, has dropped from 70% to 60% as Bitcoin’s rally attracts more investors.
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“Users tend to buy Bitcoin when they see its value increase, while stablecoins are often used for physical transactions and international payments,” Beaudroit explained. With Bitcoin’s continued growth, Argentines are now diversifying their savings, exploring investment opportunities to hedge against inflation after years of relying on dollar-denominated savings.
The government has also supported investing in cryptocurrencies. In December 2023, the Argentine government announced tax incentives for declaring their cryptocurrency holdings.
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