Traders in the troubled economies appear to be turning to Bitcoin as their currencies falter
According to a recent report from analytics firm Arcane Research, Bitcoin has just broken price records in Argentina, Brazil, and Turkey – with the growth of 169%, 20%, and 5% respectively over the past two months. However, these statistics show more clearly the predicament of these countries’ economies than about any growing local concern for cryptocurrencies. But, in Argentina and Brazil, the increase in Bitcoin trading volume suggests that traders can favor cryptocurrencies as a hedge against other assets.
Did you know that #bitcoin has broken its all-time high vs Argentine Peso, Turkish Lira and Brazilian Real?
— Arcane Research (@ArcaneResearch) August 10, 2020
Argentina and Brazil have registered new highs this year in weekly Bitcoin trading volumes
Both Brazil and Argentina experienced a financial crisis long before the COVID-19 pandemic, which only made things worse.
The financial turmoil brought on by COVID-19 pandemic, which Brazil’s president suggested in May was just a “little flu,” has seen the real (the local Brazilian currency) devalued by more than 30% against the US dollar. Interest rates have also fallen to historical levels of 2% per year, causing the popular strategy of investing in fixed-income instruments to be set aside in favor of funds, stocks … and, it appears, even cryptocurrencies.
According to data from Useful Tulips, Brazil just recorded more than $ 700,000 in Bitcoin transaction volumes last week, the highest level in the new year to date. Meanwhile, Argentina last week surpassed $ 1 million in weekly Bitcoin trading volume, a figure that has never been achieved by domestic traders before.
Argentina is currently in the midst of its worst economic crisis in decades, with a lot to blame.
Both the leftist government of the Kirchner dynasty and the rightist governments from Menem to Mauricio Macri failed to move the country forward. The current president, Alberto Fernández, inherited from former President Macri an economy considered the world’s second most difficult, after Venezuela.
Against this backdrop, the Argentinians appear to be turning to Bitcoin in more significant amounts as a possible way to protect against a devaluation of the local currency, as local regulations prevent them from easy access to foreign currencies.
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