Argentinians Turn To Bitcoin As Inflation Rises: Report

Argentinians are increasingly turning to Bitcoin as a haven in the face of persistent inflation and economic instability, with recent data showing an increase in cryptocurrency purchases.

This trend comes as Bitcoin has experienced an impressive rally in recent months, reaching record highs and above traditional hedges against inflation-linked currencies such as the US dollar.

Bitcoin purchases are increasing in Argentina

According to a Bloomberg report, the number of weekly bitcoin purchases in Argentina rose to 34,700 in the first week of March alone, marking the country's 20-month high. This increase represents more than double the levels seen in early February, indicating growing Argentine interest and acceptance of Bitcoin.

Bitcoin's appeal has been exacerbated by defying ever-inflation, with the cryptocurrency posting record gains, up 73% year-to-date and hitting an all-time high above $73,000. This increase has been attributed to a variety of factors, including the US's first-ever introduction of Bitcoin exchange-traded funds (ETFs) and speculation surrounding the upcoming April halving event.

Argentina's inflation, currently at 276 percent, has eroded the value of its national currency, the peso, leaving citizens looking for alternative safe-haven assets. Traditionally, the US dollar has been preferred by Argentines seeking stability during an economic crisis. However, the recent strengthening of the peso, coupled with government efforts to stabilize the currency, has dampened demand for the greenback.

The rise of the dollar remains a distant prospect

The administration of President Javier Millais has taken steps to address economic problems, including efforts to clean up the central bank's balance sheet. Although Miley campaigned on a promise to dollarize Argentina's economy, his immediate approach after taking office focused on controlling the value of the peso rather than increasing the dollar. He pointed out that getting a full dollar is a distant prospect.

The shift to Bitcoin as a hedge against inflation and economic instability has led to a decline in demand for traditional assets, including digital tokens tied to real currencies such as USDT and USDC.

Argentina has a history of economic instability, characterized by periodic devaluations of its currency, which creates challenges for its residents in saving and managing finances. This is fueled by the appreciation of the peso, high inflation and the desire to avoid limitations in accessing foreign currencies, which has increased the demand for cryptocurrency in the country.