Argentina’s economic situation almost gets worse by the month. Despite the government’s many measures to revive the peso, many keep losing faith in it. Now, it appears that the love that Argentinians have built for cryptocurrencies is on the rise.
The Argentine Crypto Craze
Paxful, one of the crypto industry’s top peer-to-peer exchanges, released a survey which shows how much faith Argentines have in crypto. The survey was conducted by local industry firm Cripto 247 on behalf of the exchange. The poll took responses from 1,113 Argentines between the ages of 18 and 55. Of the respondents, 69.5 percent explained that they had made at least one crypto investment, as a hedge against the constant depreciation of the peso.
The survey added that 67.8 percent of the population believes that cryptocurrencies are currently safer than the peso. 73.4 percent also answered that they thought cryptocurrencies were the best way to protect their funds in the current economic scenario.
“During this year we have observed a major increase in the operations carried out by Argentine users on our platform, especially since the pandemic started, registering an increase of 37.5% in the volume compared to the previous periods,” a representative from Paxful said to news reports.
The spokesperson added that the company’s sentiment towards cryptocurrencies remains strong, as inflation fears have driven the public to digital assets.
Crypto Could Be Argentina’s Only Hope
Argentina’s love affair with cryptocurrencies became a topic of interest last year, when the government drove many residents towards the assets through a contractionary monetary policy. The country has been dealing with crippling inflation for decades, with Reuters reporting last November that inflation levels were estimated to reach 53 percent by the end of the year.
Through this long, inflation-ridden road, Argentinians have developed an excessive dependence on the dollar. As of 2014, the Washington Post reported that there was up to $50 billion in dollar-denominated bank accounts and physical cash in the country. The peso also fell to a record low in August 2019, marking more reasons for earning and saving in dollars.
Looking to reform things, newly-elected President Alberto Fernandez rolled out a currency control policy that restricted the amount of dollars available to savers from $10,000 a month to $200.
Fernandez’s policy is understandable. To reduce the dependence on the dollar, you have to restrict peoples’ ability to hold it. However, with a local currency that continues to plunge, the policy also dooms people.
The capital flight into Bitcoin was quick. In the week of Fernandez’s victory, Bitcoin’s trading volume in Argentina hit 14.15 million pesos — the third-largest week in history. 2020 has definitely been worse for the Latin American country. Data shows that Argentina’s economy fell by 26.4 percent in April 2020 over 2019. The coronavirus pandemic has stifled operation and employment, and those who still have jobs have been looking for ways to protect themselves.
With the dollar almost inaccessible, cryptocurrencies provide the best help for a nation in crisis.