With Argentina’s weight extremely undervalued and recession in sight, Bitcoin has been one of Argentina’s favourite outlets
The Argentine currency crisis is taking on increasingly severe proportions, forcing Argentines to seek alternatives to deal with the currency disproportion of their economy.
One of the solutions has been the adoption of Bitcoin, used as a reserve and means of remittance abroad.
The rate, which was 1:1 to the dollar in the 1990s, is now 75:1 and melting, creating a confusing scenario of high inflation and economic devaluation.
The government recently imposed a 35% double tax on dollar purchases – which were already taxed at 30% – thus causing a herd effect, causing Argentines to abandon dollar exchange houses and „money changers“, very typical on the streets of Buenos Aires, and run to the exchanges.
The dollar is sold at AR$ 75 of the official rate. In turn, Bitcoin saw a 5% rise on Sunday and is already worth AR$ 821,161 (R$ 61,248.10).
Inflation and monetary devaluation
However, even in this scenario of currency collapse, Argentine inflation is not operating at high levels and has fallen somewhat in the last quarter. Certainly under the effect of the economic slowdown.
Accumulated inflation over the last twelve months has been 42.8%, which shows an upward brake on the cost of living which was 53.8% in 2019.
The International Monetary Fund estimates a 9.9% decline in Argentina’s GDP this year due to the contraction of activity by the VIDOC-19 pandemic. The compulsory social isolation was established on March 20 to prevent the circulation of the new coronavirus and is still in force.
In addition, utility tariffs have been temporarily frozen and exchange control now pushes Argentines even further towards Bitcoin.
According to data collected by Coin.Dance from Local Bitcoin Formula, a considerable increase in operations in P2P by Argentines can be clearly seen.
On September 5, no less than 74,005,767 Bitcoins were negotiated in the country.
According to data extracted from Bitso, the largest Mexican exchange that recently started operations in Argentina, the data shows consistent growth in demand from Argentines for Bitcoins.