Amid the escalating inflation crisis in Argentina, citizens are increasingly turning to Bitcoin (BTC) over the US dollar to safeguard their wealth.
A report by Bloomberg highlighted that the Argentina-based crypto exchange, Lemon, observed a remarkable increase in Bitcoin transactions, recording 35,000 in the week ending March 10. However, this figure is double the weekly average of the previous year, signaling a shift in investment preferences amid economic instability.
Other Argentine exchanges, such as Ripio and Belo, have noted a similar trend. Belo’s CEO, Manuel Beaudroit, reported that the volume of Bitcoin and Ethereum (ETH) purchases in 2024 has increased tenfold compared to the same timeframe last year. Conversely, the demand for currency-backed stablecoins has decreased, with their purchase rates dropping from 70% to 60%.
Argentina’s inflation crisis and cryptocurrency
Argentina’s inflation rate has reached 276%, positioning it as one of the highest globally. This economic pressure has diminished the appeal of traditional safe-haven assets like the US dollar, particularly over the past two months. During this period, Bitcoin’s value in dollars rose by 60%, significantly overshadowing the Argentine peso’s 10% gain against the US dollar.
Argentines hold around $200 billion in US currency savings, ranking third worldwide after the United States and Russia. Despite this, the current economic climate has pushed locals towards using their dollar savings to invest in cryptocurrencies as a hedge against inflation.
Shift in Argentine investment behavior
The increasing preference for Bitcoin and other cryptocurrencies in Argentina reflects a notable change by citizens. As the country grapples with severe inflation, residents are seeking alternative means to preserve their financial stability, opting for digital currencies over more traditional assets.
At the time of writing, Bitcoin trades at $66,340 and down by 1.36% in the last 24 hours, according to Coinmarketcap.