Bitcoin Price Spikes in Lebanon as Economic Uncertainty Continues

Bitcoin traders in Lebanon are seeing a significant boom, as the asset has been on a massive rally in recent times.

Data from popular peer-to-peer trading platform LocalBitcoins currently shows that the Bitcoin price premium in Lebanon is as high as $15,000 – a peg which is currently over 50 percent higher than the asset’s actual trading price.

Capital Restrictions Drive the Latest Surge

As it is with a lot of countries that experience spikes in Bitcoin prices, the Lebanon situation has also been caused by a significant crunch in the country’s traditional financial space. Lebanon is currently in the midst of its worst financial situation in years, and to manage the situation, commercial banks have now imposed capital controls on customers that will force them to withdraw their savings in Lebanese pounds at the official exchange rate.

Thanks to the measures, the savings of Lebanese people have been cut to 40 percent the value of the parallel market. Following civil unrest, banks across the country immediately shut down, as ATMs went dry and the country’s financial space was essentially left dormant. Things are a tad better now, but citizens are still looking to weather the storm and find a way to come out as unscathed as possible.

Speaking with a local, Al Jazeera explained that the capital controls had put immense pressure on the country’s citizens, as many of them have scrambled to find new ways to preserve their wealth. The most prominent method, as it would seem, has been Bitcoin.

Bitcoin as the Saviour of Economically Desperate Countries

The situation mirrors what we already know from several other nations. In Argentina, the government has had to deal with decades of financial instability, thanks in large part to the Peso and its volatility. To help keep their wealth, citizens started to borrow more dollars, hoping to hedge against their national currency’s shaky value with the reliability of the greenback.

When new president Alberto Fernandez came into power late last year, however, one of his first policy implementations was to restrict the number of dollars that Argentinians can borrow to just $200 a month (the previous peg being $10,000). With no dollar in sight and a continuing falling Peso, Argentinians turned to Bitcoin and started to trade in the asset heavily.

In the second and third weeks in December 2019, LocalBitcoins reported 22.4 million and 21.5 million Pesos in Bitcoin trades from the country, respectively.

Several other countries have reported similar occurrences, including but not limited to Venezuela, and even Iran, in the wake of renewed tensions and the threat of an all-out war with the United States. While trades have slowed down significantly since then for a lot of these countries, it goes on to show that more often than not, Bitcoin has been able to come to the aid of people whose countries have experienced – or are experiencing – a financial disaster.