According to Bloomberg, Argentinians are buying Bitcoin to protect themselves from the impact of a 276% inflation rate and are no longer in a hurry to exchange their local currency, the peso, for US dollars. The Bitcoin purchase volume on Lemon, the most popular cryptocurrency exchange among retail customers in the country, has reached its highest weekly level in 20 months.
As Argentine President Javier Milei implements shock therapy policies aimed at resetting the economy, local residents are finding ways to cope with economic recession and one of the world’s most severe inflation rates. The primary “safe haven” of converting pesos into dollars, which has been in place for decades, has lost some appeal in the past two months as the parallel exchange rate to the US dollar has grown by 10%, while Bitcoin has seen an almost 60% increase relative to the dollar during the same period.
One of the main driving factors behind the recent strength of the peso is Milei’s strict control over the circulation of currency, preventing it from growing while the central bank rebuilds its cash reserves.
During the week ending March 10th, Lemon recorded nearly 35,000 customer transactions purchasing Bitcoin, double the average weekly trading volume from last year. Similar behavior has been observed among customers of other major Argentine exchanges, such as Ripio and Belo.
Manuel Beaudroit, CEO of digital wallet company Belo, stated in an interview that the company’s trading volume for Bitcoin and Ethereum (ETH) has increased tenfold compared to the same period last year. He pointed out that as the rise of Bitcoin attracts more buyers, the purchase rate of stablecoins has decreased from 70% to 60% during this period.
Beaudroit said, “Against the backdrop of Bitcoin’s surge, Argentinians are now reducing some of their US dollar savings and beginning to choose investment options.” However, the number of reports on cryptocurrency scams in the country has also increased fivefold in February. Gabriela Battiato, legal representative of the Argentine non-governmental organization Bitcoin Argentina, stated:
