Argentines are increasingly turning to bitcoin instead of US dollars as a means to combat the country's ongoing issues with hyperinflation. The cryptocurrency has seen a surge in popularity as it reached record highs this month, offering a glimmer of hope in the face of relentless inflation.
Bitcoin Surges in Popularity
In the first week of March, Argentina witnessed a significant spike in weekly bitcoin purchases, reaching a staggering 34,700 transactions. This surge marked the highest volume of bitcoin purchases in the country in the past 20 months, more than doubling the levels observed in early February.
Bitcoin's Impressive Performance
Bitcoin's value has experienced a remarkable uptrend in recent months, with a year-to-date increase of up to 73%. The cryptocurrency reached an all-time high of over $73,000, driven by factors such as the launch of the US' first spot bitcoin ETFs and anticipation for the upcoming halving event in April.
Bitcoin as a Hedge Against Inflation
Amid Argentina's staggering inflation rate of 276%, bitcoin has emerged as an appealing hedge for investors seeking stability. The country's economy has been plagued by its sixth recession in a decade, prompting individuals to explore alternative assets like bitcoin to safeguard their wealth.
Shift Away from US Dollar
Traditionally, the US dollar has been the preferred choice for Argentines during times of economic turmoil. However, with the peso strengthening by around 10% in the last two months, the appeal of the greenback has waned. President Javier Milei's efforts to stabilize the peso and revamp the central bank's balance sheet have further impacted the demand for the US dollar.
Challenges in Dollarizing Argentina's Economy
Despite electoral promises to dollarize the economy, President Milei has faced challenges in implementing this strategy since assuming office in December. While the official peso-to-dollar rate has been devalued, the path to full dollarization remains uncertain, with Milei indicating that it will be a gradual process.
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By: fdemott@insider.com (Filip De Mott)
Title: Argentines Embrace Bitcoin Amid Runaway Inflation
Sourced From: markets.businessinsider.com/news/currencies/argentina-bitcoin-inflation-rally-dollar-greenback-dollarization-inflation-milei-peso-2024-3
Published Date: Tue, 19 Mar 2024 19:32:11 +0000
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