Bitcoin Purchases In Argentina At 20-Month High Amid Soaring Inflation

In response to Argentina’s soaring inflation rate of 276%, individuals are increasingly turning to Bitcoin as a means of safeguarding their wealth instead of opting for the traditional approach of exchanging pesos for dollars. This shift in strategy disrupts a longstanding practice that has historically made Argentina one of the leading destinations for dollarization amidst its economic instability.

Bitcoin Purchases in Argentina At 20-Month High

Bitcoin purchases in Argentina surged to their highest weekly value in 20 months at Lemon, a popular local cryptocurrency exchange. This uptick reflects a growing trend among Argentines seeking financial stability amidst a recession and one of the world’s highest inflation rates.

Traditionally, exchanging pesos for dollars has been a common strategy to hedge against economic volatility, but this approach has waned in popularity in recent months. This decline coincides with the strengthening of the commonly used parallel exchange rate against the dollar by 10%. On the other hand, Bitcoin has seen a nearly 60% surge against the greenback during the same period.

Lemon reported a significant increase in customer transactions, with almost 35,000 purchases of Bitcoin recorded in the week ending March 10, double the weekly average seen in the previous year. Similar trends appeared among customers of other major exchanges in Argentina, such as Ripio and Belo.

A key factor contributing to the peso’s recent strength is Milei’s stringent control over the money supply, preventing its expansion while the central bank replenishes its reserves of US dollars.

Swapping USD for BTC

According to Manuel Beaudroit, CEO of digital wallet Belo, the volume of Bitcoin and Ether transactions has surged tenfold in 2024 compared to the same period last year. He highlighted that the proportion of stablecoin purchases, often linked to currencies like the US dollar, has decreased from 70% to 60% as Bitcoin’s rally attracted more investors.

Beaudroit explained, “Users tend to buy Bitcoin when they see its value rising, whereas stablecoins are often used for practical transactions and international payments.” With the ongoing Bitcoin surge, Argentinians are now diversifying their savings, exploring investment opportunities to hedge against inflation after years of relying on dollar savings.

The government has also been supportive of crypto investments. In December 2023, the Argentinian government announced tax incentives for declaring their crypto holdings.