While DeFi may have some traders dreaming of complicated lending strategies and government protocols, in some parts of the world it is still Bitcoin that promises a censorship-proof way to protect against rapid inflation of local currencies.
According to a recent report by analytics firm Arcane Research, Bitcoin has just broken price records in Argentina, Brazil, and Turkey–with growth (in fiat terms) of 169%, 20%, and 5%, respectively, over the last two months.
In truth, however, these statistics say much more about the turbulent state of the economies of these countries than it does about any growing local interest in crypto. But when it comes to Argentina and Brazil, in particular, a rise in local Bitcoin trading volume suggests that crypto could gain an advantage among traders as a hedge for other instruments.
Both Brazil and Argentina have already experienced financial crises long before the coronavirus pandemic, which only made things worse.
The financial turmoil caused by COVID-19 pandemic, proposed by Brazil’s president in May was just a “little flu,” has seen the real (the local Brazilian currency) devalued by more than 30% against the US dollar. Interest rates have also fallen to historic levels of 2% per year, which is attributed to the popular strategy of investing in fixed income instruments in favor of funds, stocks … and, it turns out, even cryptocurrencies.
According to metricsite data Useful tulips, Brazil last week registered just over $ 700,000 in Bitcoin trading volume, a new year to this day.
Meanwhile, Argentina last week turned $ 1 million into weekly Bitcoin trading volume, per data from Useful Tulips, a figure never before reached by traders in the country.
Argentina is currently in the midst of its worst economic crisis in decades, with a lot of debt to go around.
Both the left-wing governments of the Kirchner dynasty and the right-wing governments of Menem to Mauricio Macri did not advance the country. The current president, Alberto Fernández, inherited from former President Macri an economy that is considered the second-worst in the world, behind only Venezuela.
It is with this background that Argentines seem to be turning to Bitcoin in larger numbers as potentially a way to protect against a devaluing local currency, given that local regulations prevent them from easily accessing foreign currencies such as dollars or euros.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
