Why are they buying more and more Bitcoin in Argentina and what does it show about their economy?

lArgentines are buying more and more Bitcoin Instead of rushing to exchange pesos for dollars to save themselves from 276 percent inflation, ending the timeless strategy that has plagued the country with crises In one of the greenest places in the world.

buying bitcoin in argentinaThe country, one of the countries with the highest level of cryptocurrency adoption in the world, reached its highest weekly value in 20 months on local cryptocurrency platform Lemon. Most popular among retail customers in the South American country.

Argentina is looking for ways to avoid recession and one of the highest inflation rates in the world as President Javier Meli implements his “shock therapy” policies aimed at reviving the economy.

The exchange of pesos for dollars, the main safe haven asset for decades, has lost some of its appeal over the past two months, Since the commonly used parallel exchange rate has strengthened 10 percent against the dollarWhereas Bitcoin has increased by almost 60 percent against the dollar in the same period.

Lemon recorded nearly 35,000 customer transactions to buy Bitcoin in the week ending March 10, double the weekly average of last year. This behavior was similar to that of clients of other large Argentine exchanges such as Ripple and Bello.

One of the main factors behind the peso’s strengthening in recent weeks is Mili’s tight control over the amount of money in circulation, preventing it from rising while the central bank rebuilds its dollar reserves.

Bitcoin and Ether volume has increased tenfold so far in 2024 at the Belo digital wallet compared to the same period last year, its CEO Manuel Beaudroit said in a telephone interview.

He said purchasing stablecoins – crypto assets often tied to currencies like the US dollar – They have declined 70 to 60 percent during that period as Bitcoin’s rally has attracted more buyers.

Beaudroit said, “The user decides to buy Bitcoin when he sees the news that the currency is rising, whereas with the stablecoin he is more practical and often uses it as a means of making payments abroad for transaction purposes.” Uses.”

According to a 2012 Federal Reserve document, Argentina is one of the top two countries in the world, along with Russia, in shipments of US dollar bills. The New York regional Fed’s press office declined to provide more recent data.

Savers in the South American country hold about US$200,000 million in US currency, This figure is ahead only of the United States and Russia, according to an analysis by Argentine economist Nicolás Gaidano based on central bank data.

Amid the Bitcoin rally, Argentines are getting rid of some of their dollar savings and turning to investment options that allow them to protect themselves from inflation for the first time in years.

As a result, reports of cryptocurrency scams increased fivefold in February, according to Bitcoin Argentina, the leading NGO in the sector in the country.

“Argentinians’ desperation to make ends meet and not lose their savings leads them to make hasty decisions without measuring the risks, making them easy prey for scammers,” said Gabriela Battiato, head of legal at Bitcoin Argentina. “