Bitcoin reached a new all-time high in Argentina, soaring to a record valuation of 40 million pesos per BTC.
Amidst the backdrop of Argentina’s plummeting peso, which has seen a staggering 99% decline against the dollar since 2018, digital assets are slowly emerging as a beacon of financial resilience and stability for many citizens.
Argentines Prefer USDT
Argentina has a history of economic instability marked by frequent currency devaluation, complicating savings and financial management for its residents.
Over the past century, it has oscillated between periods of growth and dysfunction, transitioning from being one of the world’s wealthiest nations to facing prolonged financial crises, extensive debt, and triple-digit inflation.
As a result, citizens have turned to digital assets, showing strong grassroots adoption. In a bid to preserve purchasing power, Argentines have resorted to popular stablecoins such as USDT and USDC for saving and converting local earnings instead of Bitcoin.
According to Chainalysis’ findings, Argentina ranks 15th worldwide in the adoption of digital assets.
During the 1980s, when Argentina introduced currency controls, public money exchanges transformed into underground entities known as “financial caves.”
These entities have now resurfaced as “crypto caves,” serving as black market exchanges where its citizens purchase US dollar stablecoins. Operating covertly in concealed locations, these underground peer-to-peer exchanges facilitate transactions away from public view.
Struggle for Stability
Argentina has experienced a substantial increase in its inflation rate. According to the Organization for Economic Co-operation and Development (OECD), the country’s inflation is projected to hit 250.6% in 2024. Additionally, the country’s economic downturn is predicted to exceed earlier projections.
In an update this month, the OECD stated,
“High inflation and sizeable fiscal tightening are projected to result in an output decline in Argentina in 2024 before growth recovers in 2025 as reforms start to take effect.”
These developments coincide with the implementation of extensive reforms by Argentina’s recently elected libertarian President, Javier Milei, prompting demonstrations throughout Latin America’s third-largest economy.
During a recent interview, the libertarian leader emphasized that dollarization is the final phase in a series of reforms. Before this, his government intends to resolve the central bank’s balance sheets by June, followed by changes to the banking system. Additionally, he expects the banking system to be reformed within a year.
Under Milei’s presidency, there has been substantial peso devaluation alongside extensive reform efforts.