Why This One Country Alone Can Send Bitcoin and Ethereum Higher

By August 5, 2022DeFi
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Economies around the world are ushering in a new era of finance, and Brazil is leading the charge.

Digital assets have forged a path that can no longer be ignored. They have progressed enough in the past decade or so to the point that countries and cities are beginning to realize that embracing the technology will position them better in the long run.

One country all-in on crypto is Brazil. Its 215 million citizens now live in one of the most crypto-centric economies in the world.

Crypto has been integrated into various levels of Brazil's economy. Its stock exchange has six crypto-related exchange-traded funds (ETFs), including a traditional Bitcoin (BTC 1.36%) ETF and a newer ETF that tracks cryptos like Ethereum (ETH 3.28%), Uniswap (UNI 3.56%), and Curve (CRV 2.95%) that support decentralized finance (DeFi) projects.

Major cities like Rio de Janeiro are showing how local governments can use digital assets and blockchain technology. In late July, Rio's secretary of finance said that the city is looking to add Bitcoin to its treasury portfolio, saying that the city hopes to become "the crypto ecosystem of Brazil" and the "innovation and technology capital of the country."

The embrace at the highest levels of government and finance is also reflected in cryptocurrency ownership among Brazil's citizens. It is estimated that roughly 16% of people ages 16 to 64 own some form of cryptocurrency. This leads all of Latin America and beats the U.S., which comes in at about 12%.

The banks are coming

That 16% looks like it will continue to grow based on recent developments with the country's banks. Last June, the country's largest digital bank, Nu Holdings' (NU 4.94%) Nubank, launched its own crypto trading platform, allowing users to trade Bitcoin and Ethereum. In just under one month, the platform has added more than 1 million customers. Nubank is also allocating 1% of its cash to Bitcoin to show its belief in the cryptocurrency.

With its recent success, Nubank competitors are entering the crypto game. Banco Santander Central Hispano (SAN 0.41%), Brazil's fourth-largest bank, announced that it will be pursuing a strategy to offer crypto related products to its 53 million customers.

In a press release, Santander Chief Executive Officer Mario Leão said that the bank isn't pursuing crypto products as a reaction to competitors but because it recognizes that it's a market that's here to stay. More details on the bank's crypto products could be released in the quarterly earnings report in October.

The rise of the digital country

The path that Brazil's municipal governments, financial institutions, and citizens are creating could be a model for the rest of the world. Bitcoin in particular seems to be the country's favorite, but the embrace of all crypto and blockchain-related technology is positioning it as a leader in the digital economy.

Continued investment in that economy through job creation, more-accessible trading, and a more pro-crypto government will ensure that adoption of top digital currencies persists. If other countries and cities follow Brazil, we should expect Bitcoin to proliferate into all sectors of the economy, increasing its price, a development that will benefit crypto investors.

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