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Demand for Bitcoin in Argentina Goes Through the Roof as Peso Inflation Ravages

Argentines turn to Bitcoin while ARS devalues rapidly 

In the face of the Argentine peso's (ARS) dramatic devaluation against the US dollar, Argentina's populace has turned to Bitcoin with unprecedented enthusiasm. Over the last year, the ARS has seen its value quadruple against the dollar, plummeting from 0.0049 USD per ARS in March 2023 to a mere 0.0012 USD. This financial downturn has spurred Argentines to seek refuge in Bitcoin, marking the highest demand for the cryptocurrency in nearly two years.

A report from Bloomberg on March 20 highlighted this surge, with data from Lemon Cash showing that in the week ending March 10, around 35,000 customers in Argentina opted for Bitcoin purchases. 

This figure doubles the weekly average observed throughout 2023. The decline of the national currency is a significant factor propelling this increased demand for Bitcoin. Notably, Lemon Cash is not the only platform witnessing this trend. Major Argentine exchanges like Ripio and Belo have reported similar upticks in Bitcoin transactions.

The shift towards Bitcoin and away from traditional stablecoin investments underscores the growing allure of cryptocurrency as a hedge against economic instability. Manuel Beaudroi, CEO of the digital wallet Belo, observed a decrease in stablecoin purchases from 70% to 60%, attributing this change to Bitcoin's rising value and its appeal as an investment during turbulent times.

Crypto's role in Argentina's financial strategy

Despite the soaring interest in Bitcoin, stablecoins retain a significant place in Argentines' financial planning, offering a semblance of stability in a volatile economic landscape. However, a notable shift in purchasing behavior has emerged, with reports indicating a move away from well-known exchanges to "crypto caves" – black market venues offering USD stablecoins as a hedge against the soaring inflation and stringent currency controls.

Cryptostake's report on February 12 shed light on this trend, revealing Argentines' growing preference for these underground exchanges to circumvent the country's economic constraints. This pivot towards digital currencies is further underscored by the government's recognition of crypto's potential utility in formal transactions.

In December 2023, a landmark decree facilitated the use of Bitcoin and other cryptocurrencies under specific conditions, marking a significant step towards integrating digital currencies into Argentina's economic framework.

This legislative openness culminated in a groundbreaking event in Rosario, Argentina's third-largest city, where a rental agreement was formalized entirely in Bitcoin. This development not only underscores the practical application of cryptocurrencies in daily transactions but also highlights the growing acceptance and integration of digital currencies in Argentina's broader economic strategy.