The price of Bitcoin reached new heights in terms of the Argentinian peso, while the currency dipped and other assets lost value. Bitcoin’s recent rally coincides with the candidate’s presidential triumph in the face of his competitors. The asset was 20% higher in price and showed a new performance against the country’s currency. The surge in price happened during the primary elections, when Javier Milei, party leader of the Freedom Progress, or La Libertad Avanza in Argentina, received strong support and won against its competitors with over 30% of the vote. He has long demonstrated his endorsement of digital currencies and the technological infrastructure that underpins them, and despite their tremendous volatility, a large part of the population buys into them. For instance, over half of Argentinians thought that cryptocurrencies like Bitcoin were efficacious in securing the value of their savings last year, despite the challenging circumstances witnessed at that time.
Additionally, more and more Argentinians opt to receive payments in cryptocurrency instead of fiat money, fueling activity on cryptocurrency exchanges and platforms that facilitate these transactions. Digital coins are not just purchased with debit cards here. A notable portion of the Argentinian populace knows how to buy Bitcoin with credit card and set up digital wallets to store or further facilitate other types of transactions.
The South American country is largely recognized as being a crypto-friendly country, and the approach is confirmed by the growing number of companies paying employees with cryptocurrency. The friendly stance taken by the winner of the primary presidential elections resonates with the sentiment held by the majority of the country’s population. Let’s delve deeper into the landscape of Bitcoin and digital currencies in Argentina.
Argentina’s approach to cryptocurrency is relatively relaxed
Bitcoin doesn’t hold the status of legal tender in Argentina, as it does in countries such as El Salvador and the Central African Republic starting in 2021, respectively, 2022. Argentinians can’t use it or any other type of digital currency to pay fines or debts, execute contracts, or meet any other financial obligations. However, cryptocurrencies are not illegal. The country is likely to regulate them faster than other states to minimize the risks that exposure to them involves. For instance, by the end of 2022, the government declared it would create a “national blockchain committee” responsible for developing policies to improve the blockchain ecosystem.
The pro-BTC presidential candidate Javier Milei is a proponent of Bitcoin and asserts that Bitcoin may potentially reduce, if not solve, the country’s current unfavorable economic situation. The persistent increase in inflation rates fuels the circumstances, and the candidate believes that Bitcoin can foster a healthier financial environment.
Argentinians have long shown endorsement toward digital money
A study carried out by Morning Consult, a worldwide decision intelligence company, revealed that at least 30% of Argentinians made a crypto transaction at least once a month last year. Compared to the U.S. population, the figure represents twice the level of engagement. One of the reasons behind the rise in participation can be attributed to the aspiration to overcome challenges associated with the fluctuating value of the Argentinian peso. In July, inflation rates rose to 115%, up from 98% at the beginning of the year. As always, the price increases are attributed to the fast pace at which the government is printing money and the quick growth of the money supply.
Despite the uncertainty inherent to digital money, Argentinians continue to turn to these assets, which serve as a haven in the face of rising prices for goods and services.
The cryptocurrency market in Argentina projected to increase by a third
According to Statista, the cryptocurrency market is expected to value US$112 million by the end of the year and expand by approximately 30.58% by 2027. The average crypto owner uses mobile devices like smartphones or tablets to invest in Bitcoin and other cryptocurrencies, store them long-term or send them to other digital wallets.
Looking at the transaction volume in the Latin American country, it almost entered the ranks of the top 10 countries in terms of cryptocurrency adoption, being overtaken by Canada, Hong Kong, Australia, and several other states. In this respect, peer-to-peer exchanges play a pivotal role in the expansion rate. The country is highly reliant on receiving remittances, which may influence the involvement rates in cryptocurrency.
Is Bitcoin a good investment choice?
When considering the inclusion of Bitcoin in your investment portfolio, the first thing to take into account is its erratic fluctuations and substantial volatility. Bitcoin’s price instability is associated with various factors, such as demand and supply, as well as the activities of prominent market participants like the “whales”. The term “whales” refers to large investors who amass significant amounts of Bitcoin, impacting movements in the market by either buying excessively and spurring demand or dumping colossal amounts and causing price declines.
However, Bitcoin has rewarded patient investors who stuck to their long-term investment strategies. If you want to add it to your holdings, ensure you’re not dumping it out of FOMO, FUD, or other misleading emotions that may cause you to make irrational decisions.
Bitcoin is already crossing a period of high volatility. Different upcoming events will be transformative for the asset and the past circumstances that impacted it. For instance, the approval of the first spot Bitcoin ETF in Europe and the long denial of this investment vehicle in the U.S. are also eventful for how the token’s price evolves.
Bitcoin is the asset of choice for a significant fraction of the Argentinian population
Despite the Argentinian peso’s drop in value, Bitcoin held steady and hit an all-time high. While both are highly fluctuating assets, many Argentinians favor the latter for its potential to safeguard the owners’ savings against inflationary pressure and its positive prospects of rising in the future.
Where Bitcoin is headed remains to be seen. So far, it has proven a valuable tool to store value among Argentinians and may secure this position in the foreseeable future.