No, Argentina Is Not Flocking to Bitcoin in Crisis, says Macro Trader

By August 13, 2019 Bitcoin Business
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Argentina bitcoin
As Argentina is rocked by a stock market collapse and currency crisis, one trader debunks the myth that people are turning to bitcoin. Source: Shutterstock

Crisis in Argentina grips the headlines today. The Argentine peso (ARS) collapsed 30 percent in a matter of minutes yesterday while the stock market caved 48 percent before recovering.

Bitcoiners quickly jumped on the narrative to promote the world’s dominant cryptocurrency. Many claimed that bitcoin was “surging” in Argentina while others encouraged locals to “find safety” in bitcoin.

Bitcoin is surging in Argentina, trading at ~$12,300 on @buenbit, a premium versus ~$11,400 on Coinbase, where it's having a relatively quiet day. There's a bloodbath in argie markets today after Macri lost in a primary vote and people fear the return of populism. (1/2) pic.twitter.com/EJdqATZn8L

But the narrative was quickly slammed with hard reality and facts from Alex Kruger, a macro trader and Argentine local. Far from rushing to bitcoin, he said locals are seeking refuge in the dollar and pointed to tiny BTC volumes in Argentina yesterday.

“Before bitcoiners start using Argentina (my country) as excuse to yell "Buy Bitcoin" and generate clicks and sell newsletters. Argentines want to protect themselves against the peso losing value versus the dollar. And for that, they buy dollars.”

Bitcoin safe haven: a false narrative?

Bitcoin is often touted as a hedge during currency crises. And to an extent, we have seen some evidence of this. When banks confiscated deposits in Cyprus, there was a noticeable spike in BTC prices. And some Venezuelans have found refuge in bitcoin during the recent hyperinflation crisis.

But the impact of a country's currency crisis on bitcoin is not immediate. As Kruger explains, there was no dramatic flight to bitcoin in Argentina yesterday.

“Contrary to popular belief, bitcoin awareness in Argentina is extremely low (outside of the tech industry, where it is high), and the Argentine bitcoin market is accordingly small.”

Tiny bitcoin volume in Argentina

Former Bloomberg writer Camila Russo claimed bitcoin was “surging” in Argentina. She pointed to the BTC premium on Argentine crypto exchange Buenbit.

But the premium wasn’t driven by high demand. As Kruger explained, it’s just an illiquid exchange. Only 19 bitcoins were traded on Buenbit yesterday. It doesn’t take much to distort the premiums on such a small market.

This is the Buenbit $BTCARS orderbook. Only 19 BTC traded there today.

Other Argentine brokers don't even have exchanges, offering only brokerage (either for retail or OTC).

Ripio used to have an exchange - it is now offline

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