In the face of soaring inflation, Argentines are turning away from the traditional safe haven of the US dollar in favor of Bitcoin, which has recently seen a surge in value.
The trend reflects the citizens’ search for a stable financial refuge amidst the country’s persistent inflationary pressures.
Business Insider reports a significant uptick in Bitcoin acquisitions, with the first week of March witnessing 34,700 transactions, more than doubling the previous month’s figures.
This surge aligns with Bitcoin’s impressive performance, boasting a 73% increase since the beginning of the year and reaching a peak of over $73,000, though it currently trades at $63,000.
The cryptocurrency’s ascent has been fueled by the launch of the US’ inaugural spot bitcoin ETFs and anticipation for the upcoming halving event in April, positioning Bitcoin as an appealing investment against Argentina’s staggering 276% inflation rate.
Amid efforts to avert a sixth recession within a decade, the new Argentine leadership is grappling with economic challenges.
Historically, the US dollar has been the preferred choice during times of economic turmoil, even being used for salary payments and rental transactions. However, the peso’s recent 10% appreciation against the dollar has diminished its allure.
Parallel to the dollar’s decline, there’s been a noticeable drop in demand for digital currencies pegged to tangible currencies, which fell by 60% to 70% amidst Bitcoin’s price rally.
During his campaign, Argentine President Javier Milei promised to dollarize the economy.
Yet, since assuming office, he has devalued the peso-dollar exchange rate, suggesting a lengthy timeline before full dollarization is feasible.
As Bitcoin gains global recognition as an effective inflation hedge,
Argentines are increasingly investing in the cryptocurrency to combat the country’s overwhelming inflation rate.
