Platforms for the exchange of bitcoin such as SatoshiTango, LocalBitcoins, and Paxful evidenced new caps on trading volumes in Argentina.
In April of this year, the IMF expected a contraction of at least 5.7% in Argentina. The IMF’s preliminary figure was conservative since in June update was released stating that the Argentine economy would fall by 10% in late 2020. Others believe that it could reach a peak estimated at 12.5%.
Surrounded by these predictions, exchange controls, and the semi-paralysis of the country, Argentines turn their eyes towards bitcoin (BTC) as an excellent alternative to safeguard value. A month ago Argentina registered the highest levels of purchase of the first cryptocurrency, which determines a trend that could increase in the coming months.
Platforms for the exchange of bitcoin such as SatoshiTango, LocalBitcoins, and Paxful evidenced new caps on trading volumes in Argentina. The decline of the local economy, inflation, and the revaluation of bitcoin has also been conjugated have made the price of BTC show a new all-time high in the Argentine domestic currency.
According to the information service Coin Monitor, some platforms sell bitcoin at more than 1,600,000 Argentine pesos per unit. Already in 2018, bitcoin was strengthening as a store of value in the face of high inflation in the country, something that has been ratified, and consolidated in the last two years, but with higher levels of adoption, primarily due to the reappearance of exchange restrictions.
On this point, the Argentine tax consultant Marcos Zocaro indicated in June that this type of control was encouraging the purchase of cryptocurrencies. By user preference, he mentioned that bitcoin followed by the stablecoin DAI holds the first option.
Will Argentina give bitcoin a chance?
The fact that Argentina has obtained a refinancing with its international creditors and that now it also tries to do it with the IMF could repeat patterns of the past. The facts show that the authorities, although they have the support of the institutions, would not have controlled the internal economic situation.
Talks with the IMF are expected to last until the first quarter of 2021, which shows how difficult it is to renegotiate a debt of these proportions. In any case, uncertainty and rising inflation could continue, something that could benefit bitcoin again.
Argentina’s Economy Minister, Martín Guzmán, estimated that, due to the complicated scenario, a quick agreement is ruled out.
“Due to the complexity and the number of details to be negotiated, we don’t see it quickly. It will take months, it is even possible that an agreement can only be reached at the beginning of next year,” Guzmán was quoted as saying by local media.
The official assured that under the conditions in which the country is currently, it is not possible to face the maturities that will begin in September 2021.
Seeking debt refinancing with a deteriorating economy, inflation, exchange controls, and the confession that you cannot meet your commitments might not be the best cover letter. This situation could pave the way for bitcoin to break through and meet the needs of those who seek to minimize the impact of State decisions.
By Jenson Nuñez.
