Demand For Bitcoin Skyrockets In Argentina Amid Defaults

Demand For Bitcoin Skyrockets In Argentina Amid Defaults

Argentinian Bitcoin and Cryptocurrency

Bitcoin has a history of doing well in countries with political or financial instability. This has been seen over and over again. In fact, the cryptocurrency’s creators, Satoshi Nakamoto had created bitcoin amid the 2008 global financial crisis. This shows that when the legacy system stops working or has holes in it, the world needs an alternative. The rising demand for bitcoin in Argentina tells the same tale.

When there is an increase in the volume of a financial instrument, that always means a rising interest. The volume of bitcoin purchases in Argentine pesos has skyrocketed since January 2018. This is especially interesting because global crypto markets crashed since that period. This shows that the demand for crypto worldwide was actually decreasing. However, in Argentina, it has been steadily increasing.

High Volumes Amid Defaults

At the beginning of 2018, the total volume was at about $5 million Argentine pesos. Just over two years later, the total volume is at about $50 million Argentine pesos. That is an increase of 1000% in two years. This data was posted by Arcane Research on Twitter on April 23. All this has been led by a slew of financial instability that the country has been facing.

Currently, Argentina faces a possible default on $65 billion in foreign debt. The government is yet to bring to the table a potential restructure of the debt. They also missed scheduled payments totaling $500 million on three foreign bonds. This officially started a countdown from April 22 to a formal default.

This puts huge pressure on the country and the confidence in the government might weaken further. It also might have terrible consequences for the macroeconomic stability of the country. Events and situations like these expose the holes in the legacy financial system. It also showcases the blatant mismanagement of the economy by the government.

On top of all this, the Argentine pesos itself is suffering from high inflation. So, those holding the fiat would slowly bleed value every year. The same was seen in Venezuela as well. In times like these, people look for the easiest alternative to store the value of their holdings. Historically, that mantle has been taken by gold. However, for many years now, there is one more alternative and that is bitcoin.

Store of Value

Bitcoin’s ‘digital gold’

Bitcoin’s narrative of being a store of value or “digital gold” has been challenged multiple times by many people. They have been quick to point out that bitcoin is highly volatile. As such it increases and decreases in value a lot. And as such, it doesn’t make for a proper store of value. However, the reality is quite different. In any country where the financial system remains uncertain, people automatically adopt bitcoin.

After being seen in Venezuela, Argentina has become another good example. This might strengthen bitcoin’s narrative of being a store of value. After the pandemic is subdued, the whole world might face a similar situation. This could lead to the ultimate rise of bitcoin.