Demand For Bitcoin Peaks In Argentina Amidst Financial Crisis

More than ever before, Argentinians are buying Bitcoin. In their large numbers, citizens of the South American country are dropping their currency, the Peso, in exchange for the leading cryptocurrency.

It’s like the famed “gold rush” all over again. According to reports by Arcane Research, there has never been this much in purchase demand for the cryptocurrency in Argentina.

The Arcane report explains that Argentinians are using LocalBitcoins, a popular peer-to-peer crypto exchange platform, for the transactions. Above are images from the company’s data, which illustrate a summary of the upsurge in Argentine Bitcoin purchases. 

Per the company data, the purchase volume in Argentine pesos has increased by a staggering 1028 percent. The upsurge also shows 407 percent in BTC, as well as a 139 percent increase in USD purchases, respectively, since the beginning of 2018. What this represents is a large growth in real terms as well.

Why Argentines Are Buying Bitcoin

More than the fact that Argentinians appear to love Bitcoin, it is important to know why the sudden upsurge has taken place. The most direct cause of this increase in transactions involving the Peso and Bitcoin is that the former has taken a huge hit in value in the past few months. Even more, a report from Reuters explains that Argentina’s black market Peso and its official currency both sank to new lows on April 16. This happened ahead of the nation’s long-awaited offer to creditors for restructuring around a debt of $70 billion.

Recall that due to the coronavirus pandemic, Argentina’s economy experienced even more troubling periods. The Financial Times published its findings on the economy, and it was a bleak outlook, to put it mildly. For one, the report found that Argentina has so far failed to make a $503 million payment that was meant to service its debts. The news source noted that the payment was due on April 22, and a default puts the country in even more difficult times.

Official statements maintain that the Argentine government has made a decision to stop all debt payments. Martin Guzman, the economy minister, announced that in a time when world governments are dipping their hands into the reserves to ensure the survival of their people, one must agree that debts do fall further below in the financial scale of preference. 

Thus, Guzmán said that Buenos Aires would not be retiring any debt payments in the coming weeks. By missing the payment timeline, however, the government has now triggered a 30-day grace period during which it would need to pay up to avoid defaulting on $65 billion in foreign debt owned by private creditors. 

Bitcoin: Argentina’s Financial Saviour

Argentina’s financial troubles — in addition to the global financial impact of COVID-19— mean that the country and its citizens are in desperate need of some respite. However, any measures used by the government to stabilize the markets will invariably lead to one thing: the devaluation of the Peso. 

This has even more far-reaching impacts like the reduction of the purchasing power of Argentines. So, to whom (or what, in this case) do they turn? Crypto. In comparison with other countries, Argentina seems to tend towards common salvation like the rest of the world: cryptocurrency. Cryptocurrencies have shown time again to be a safe haven in distressing financial times, and Argentinians are now taking advantage of that benefit.