Over the past week, Bitcoin has hit a new all-time high against the Argentine peso (ARS), due to ongoing inflation in Argentina. On April 18, BTC’s exchange rate passed 6.59 million pesos. After reaching this peak, the price fell to about 6 million pesos, representing a 9% drop. Despite this, the value still remains more than 100% higher compared to the beginning of the year.
The huge devaluation of the Argentine peso
Bitcoin’s advance in the Argentine market goes hand in hand with the ongoing devaluation of the Argentine peso. Residents of the country try to get rid of their pesos because of this devaluation and pay 460 ARS for 1 dollar on the black market. This amount is more than double the official exchange rate, at which 220 ARS is paid for one dollar.
FMyA, a consulting firm based in the United States, has noted that Argentina’s central bank reserves have declined by half since 2019 to an estimated $1.3 billion.
This has increased the risks of further devaluation of the peso. As a result, the local population is forced to buy dollars, which have become scarcer due to the increasing demand in the country.
Crypto is becoming more and more popular
Partly because of this situation, Bitcoin and other cryptocurrencies, which function independently of governments and central banks, are increasingly seen as alternatives. For example, data shows that Bitcoin’s weekly peer-to-peer trading volume in Argentina hit an all-time high in March.
A 2022 study also found that nearly 60% of Argentines rely on Bitcoin’s ability to protect the long-term value of their savings. The popular American crypto exchange Coinbase therefore recommends that BTC be recognized as legal tender in Argentina.
In summary, Bitcoin is increasingly seen as an alternative to traditional currencies in Argentina, particularly due to the ongoing inflation and devaluation of the Argentine peso. As locals turn to the dollar as a refuge, interest in cryptocurrencies such as Bitcoin is growing.