Bitcoin Purchases Reach 20-Month High in Argentina Amid Surging Inflation

Bitcoin Price analysis

In reaction to Argentina’s 276% inflation rate, people are increasingly turning to Bitcoin as a way to protect their wealth instead of the traditional method of exchanging pesos for dollars. This shift in policy calls into question a long-standing trend that has kept Argentina one of the top dollarization destinations despite its economic volatility.

Bitcoin Purchases in Argentina At 20-Month High

Bitcoin purchases in Argentina reached their greatest weekly value in 20 months on Lemon, a prominent local cryptocurrency exchange. This increase indicates a rising tendency among Argentines to seek financial security during a recession and one of the world’s highest inflation rates.

Historically, swapping pesos for dollars was a popular tactic for mitigating economic volatility, but this approach has declined in favour in recent months. This fall correlates with a 10% increase in the generally used parallel exchange rate versus the dollar. Bitcoin, on the other hand, has increased its value versus the US dollar by approximately 60% during the same time period.

Lemon reported a considerable rise in client transactions, with about 35,000 Bitcoin purchases registered in the week ending March 10, more than double the weekly average from the previous year. Similar patterns were seen among consumers of other large exchanges in Argentina, including Ripio and Belo.

Swapping USD for BTC

According to Manuel Beaudroit, CEO of digital wallet Belo, the amount of Bitcoin and Ether transactions increased tenfold in 2024 compared to the same period last year. He said that the proportion of stablecoin purchases, which are frequently tied to currencies such as the US dollar, has dropped from 70% to 60% as Bitcoin’s surge has drawn more investors.

According to Beaudroit, “Users tend to buy Bitcoin when they see its value rising, whereas stablecoins are often used for practical transactions and international payments.” With the current Bitcoin increase, Argentinians are diversifying their assets and looking at investment options to hedge against inflation after years of depending on dollar savings.

The government has also been supportive of cryptocurrency ventures. In December 2023, the Argentine government proposed tax incentives for declaration.

Author: Simeon

Simeon is a seasoned crypto writer with a passion for exploring the fascinating world of blockchain and digital currencies. With a background in finance and technology, Simeon brings a unique perspective to his writing, delving into the complexities of decentralized finance, cryptocurrency trading, and emerging blockchain projects.