Argentina is recording its highest volume week ever on LocalBitcoin, a peer-to-peer Bitcoin exchange platform. Although it has been at the highest volume in terms of the Argentine peso, the volume in terms of BTC is still small versus 2016.
In early April 2016, it hit its peak at 228 BTC, however, at that time, the value of 1 BTC was around $420. Today, 1 BTC is worth more than $7,365.
As per crypto exchange Ripio, the current value of 1 BTC is $548,197 Argentine peso which equals over $9,143 USD, trading at a premium of 23.5%.
On LocalCrypto, however, this is not the case as there are only about one hundred traders in Argentina in the past month. The Argentine peso is 25th by volume on the platform, reported LocalCryptos, but last month they added Bitcoin and could see these low volumes changing soon.
Capital Controls driving the need for Bitcoin?
Matt Ahlborg of UsefulTulips said, “Argentina had its highest volume day ever on Localbitcoins yesterday as capital controls on dollars increased earlier this week.”
Today, Argentina’s black market peso fell about 4.56% to an all-time low of 76.75 against the US dollar, pushing it further away from the official spot rate, which has been held steady by strict capital controls imposed in September.
Argentina’s new Cabinet chief, Santiago Cafiero said a new bill that is sent to Congress will hike taxes on goods and services purchased in US dollars to as high as 30%.
The move aims to stabilize peso that has lost over 80% of its value over the past four years, that fanned high levels of inflation, under former president Mauricio Macri.
On Sunday, new president Alberto Fernandez said Argentina is in virtual default, comparing its economic solution to the 2001 crisis. The country is currently in recession and its economy is expected to shrink by 3.1% in 2019.
“It is not the same as 2001, but it is similar. At that time poverty was at 57 percent, today we have 41 percent poor people; then we had a debt default, today we are in virtual default,” Fernández said in an interview.
Economist Says, That’s Not the case
Could it be that Argentineans are finding safety in Sats? According to economist and trader Alex Kruger, this is not the case.
“Bitcoin in Argentina is not used for safety, but as a temporary vehicle to skirt capital controls,” he said.
In September, he pointed out how the LocalBitcoin chart showing “exploring volumes” has been in the local term that has been because of the peso devaluation and not because Argentines are using the flagship cryptocurrency to “escape the economic crisis.”
In one of his recent tweets, he shared the findings of a poll he ran where he asked Argentine bitcoiners the reason behind their BTC purchase.
Out of the 3,000 people contacted, only 100 reverted that revealed only 10% bought BTC to protect themselves from the devaluing Argentine peso. The majority 80% is in it just for long or short term speculation.