Bitcoin demand in Argentina continues to surge despite the country’s failure to repay $503 million in debt this month. The citizens sold massive portions of pesos to buy bitcoin.
24 April, 2020 | AtoZ Markets – Argentina’s financial crisis, along with the global economic impact of the coronavirus is in dire straits compared to other countries. It has led many people around the world to turn to crypto as an asset reliable with no connection to traditional markets. Any measure used to stabilize the Argentine economy can potentially cause deflation of the peso.
Bitcoin Demand Goes up Despite Flailing Economy
Demand for bitcoin in Argentina has risen sharply at a time when the country is at some point in its ninth consecutive default. Argentines sold massive portions of pesos to buy bitcoin. This surge occurs “while the government is on the verge of defaulting on its debt and the currency is suffering from inflation”.
The volume of Bitcoin (BTC) in Argentine pesos has increased exponentially since the 2018 cryptocurrency crash. The country faces a possible default of $ 65 billion in foreign debt. Arcane Research data shows that the weekly volume of Bitcoin bought with Argentine pesos has increased by 1028% since January 2018. However, the volume of BTC and USD has also seen increases substantial 407% and 139%, respectively.
Demand for Crypto in Uncertain Markets
Argentina’s economic situation is fragile because it continues to walk on thin ice. The country said it could not make another payment on its sovereign debt, which was due on 22 April. It started its countdown to the next default unless it managed to restructure billions of dollars with foreign creditors.
Unfortunately for the debt-stricken country, its proposal to reduce the burden was not welcomed by a large number of bondholders. So, as the increasing debt cycle continues, practically impeding economic growth, many Argentines choose to trust Bitcoin.
In the end, the country could choose to board the Bitcoin wagon or be left out of the race. The central bank entered into a partnership with IOV Labs, the Bitcoin start-up, the 21 April, 2020. This collaboration is to design a blockchain payment system that helps the bank streamline payments, deposits, collections and other similar processes.
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