While the Mexican peso has lost 21.5% in 2020, bitcoin appreciates almost 20%

Mexico’s national currency, the peso, has depreciated 21.5% so far in 2020 compared to the United States dollar. The loss occurs amid a fall in Gross Domestic Product (GDP) and an economy that is beginning to feel the effects of the coronavirus pandemic and low oil prices.

For this Thursday, April 30, the Mexican peso showed a price of 24.11 units per dollar, while for January 1 this figure was around 18.90 pesos for each dollar. These are historical lows that are putting pressure on the peso, and on other Latin American currencies, because the investors have taken refuge in the currency of the United States.

What is happening in Mexico, with the depreciation of its currency, is also observed in other countries in the region. In the first four months of the year the Brazilian real shows a drop of 26.5%, the Colombian peso has lost 17.1% of its value, the Argentine peso another 10.1% and the Chilean peso down with 9.74 %.

Analysts believe that Mexico’s economy, the second largest in Latin America, could fall by as much as 10% in 2020. In the first quarter, a stumbling block of 1.6% was already registered, the biggest drop for a three-month period in 11 years, according to the Reuters agency.

Bitcoin gains ground

While in Mexico the peso faces a complicated situation, bitcoin has increased by 19.7% so far in 2020. The main cryptocurrency was $ 7,193 for each BTC. However, this Saturday, May 2, its price was $ 8,960 per unit, with an advance of $ 1,767, according to the CryptoNews markets index.

Bitcoin’s growth comes amid the same global landscape conditioned by the spread of COVID-19, economic recessions, low commodity prices, and widespread quarantines. That is to say, what is affecting the economies and their national currencies is also faced by bitcoin in its first major crisis, but with more favorable results.

What happened with bitcoin has escalated to such a point that it already surpasses gold as the best performing asset so far in 2020.

The best valuation of the cryptocurrency would be related to the next halving of bitcoin that will occur in about 10 days and will halve the issuance of the currency.

Unlike national currencies, which can be issued at the discretion of central banks or national governments to “control” their economies, bitcoin has a finite issue of 21 million units. Currently, this emission is 12.5 BTC for each block mined (approximately every 10 minutes) as an incentive for network miners. After halving, the issue will be reduced by 50% to 6.25 BTC.

The bitcoin boom shows that, in situations of recession or health crises like the current one, it can be an alternative to safeguard value despite the volatility experienced by the cryptocurrency market and the traditional markets for stocks, raw materials or currencies.