Argentina’s inflation pushes BTC’s price to all-time high
According to aggregated pricing data collected by Google Finance, the BTC-to-ARS conversion rate surpassed 6.59 million ARS on April 18.
Since the peak, the rate has fallen to roughly 6 million ARS, a 9% decrease but still a year-to-date (YTD) increase of more than 100%.
The rise of Bitcoin in Argentine markets corresponds to the ongoing depreciation of the ARS. On April 24, for example, merchants were paying as little as 460 ARS to acquire a dollar on the underground market – more than double the official spot rate of 220 ARS.
According to FMyA, a US-based consultancy business, the Argentine central bank’s reserves have fallen by half to an estimated $1.3 billion since 2019.
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This has increased the likelihood of future peso depreciation, as the peso has fallen about 99% from the currency crisis apex of 330 ARS in 2018. As a result, locals have sought refuge in the dollar, which has become scarce due to rising demand in the country.
At the same time, Bitcoin and other cryptocurrencies that operate beyond the purview of governments and central banks are emerging as viable alternatives. According to data from the Paxful exchange, Bitcoin’s peer-to-peer weekly volume in Argentina reached a record high of roughly $30 million in March.
Also, a study in 2022 found that nearly 60% of Argentines believe in Bitcoin’s ability to safeguard the value of their savings in the long term. Popular U.S. cryptocurrency exchange Coinbase also recommends BTC become a legal tender in Argentina.
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Bitcoin gaining traction in Argentina
Earlier this month, Argentina’s securities regulator, the National Commission of Value (CNV), approved the launch of a Bitcoin-based futures index on the Matba Rofex exchange in May. The peso-denominated derivative will allow accredited investors to gain exposure to the Bitcoin markets.
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Furthermore, a recent bill presented by the Ministry of Economy required residents to report their crypto holdings and rewarded them with tax breaks. In addition, an Argentine province announced plans to create a dollar-backed stablecoin in December 2022.
