The price of Bitcoin in Argentine pesos (ARS) hit a record high last week, as persistent inflation in the country continues to push investors towards the popular cryptocurrency. On April 18th, the BTC-to-ARS exchange rate crossed over 6.59 million ARS, according to aggregated price data tracked by Google Finance. Although the rate has since corrected to around 6 million ARS, it remains up more than 100% year-to-date (YTD).
Bitcoin’s growth in the Argentine market is occurring in parallel with the continuous devaluation of the ARS. Traders are paying as low as 460 ARS to buy $1 from the black market, more than double the official spot rate of 220 ARS for the dollar. As a result, locals are seeking refuge in the dollar, which is becoming increasingly scarce due to rising demand in the country.
The risks of further peso devaluation are high, with the Argentine central bank’s reserves dropping by half to an estimated $1.3 billion since 2019, according to the US-based consultancy firm FMyA. This has led to the local population turning to Bitcoin and other cryptocurrencies as alternatives, as they operate outside of government and central bank purview.
Bitcoin’s peer-to-peer weekly volume in Argentina reached a record high of nearly $30 million in March on the Paxful exchange, according to data. A 2022 study found that nearly 60% of Argentines believe in Bitcoin’s ability to safeguard the value of their savings in the long term. Even popular US cryptocurrency exchange Coinbase has recommended that Bitcoin should become a legal tender in Argentina.
Argentina is set to receive a $45 billion bailout from the International Monetary Fund (IMF); however, it is conditional upon the country adopting an anti-cryptocurrency stance. The IMF is concerned about the potential negative impact of cryptocurrency on financial stability and economic recovery efforts, and this condition highlights this concern.
The primary objective of the bailout is to assist in stabilizing Argentina’s struggling economy, which has been hindered by high inflation, budget deficits, and mounting debt. As part of the agreement, the government is expected to take measures to restrict the use of cryptocurrencies and associated activities within the country. The decision is likely motivated by concerns that the increasing popularity of cryptocurrencies could impede the efficiency of the IMF’s bailout operations.
Source: https://azcoinnews.com/bitcoin-price-hits-ath-in-argentine-peso-amid-inflation-woes.html
