Argentina's Greenback Love Is Being Substituted by a Bitcoin Rush

The popular savings strategy of exchanging pesos for U.S. dollars in Argentina is being substituted by bitcoin investments, which have had better performance lately. Numbers from Lemon, a local cryptocurrency exchange, indicate bitcoin purchases have risen to their highest number in 20 months as Argentines seek better alternatives than the dollar, whose value has been controlled due to President Milei’s policies.

Dollar Fever Subsides in Argentina While Bitcoin Rises

Bitcoin is rising in Argentina as an alternative to the U.S. dollar to cope with the inflation levels in the country’s economy. Numbers offered by Lemon, one of the largest local exchanges in Argentina, indicate that bitcoin purchases have risen to a 20-month high, reaching almost 35,000 transactions in the week ending March 20.

The rise has been constant as the week before over 27,000 bitcoin purchase transactions were made. This bitcoin rush has been seen as unusual by analysts, as Argentines have relied on the U.S. dollar to cope with the deteriorating conditions of their economy.

While other countries in Latam have been more open to using bitcoin and other cryptocurrencies as investment tools, Argentina has been different. A report by Lemon issued in February found that 80% of all crypto purchases in Argentina in 2023 corresponded to stablecoins and that 70% of the deposits processed in 2023 involved Tether’s USDT, the largest dollar-pegged stablecoin in the crypto market.

However, this behavior is not limited to Lemon, as Belo, another local wallet, has reported purchase volumes of ether and bitcoin rising tenfold compared to last year’s same period. Belo CEO Manuel Beaudroit said that the bitcoin bull rally has also made stablecoins’ popularity take a hit.

Beaudroit stated:

The user decides to buy Bitcoin when they see the news that the currency is going up, while stablecoin is more pragmatic and many times used for transactional purposes, as a vehicle to make payments abroad.

This rush to bitcoin and stablecoins might be related to the relatively strong performance of the Argentine peso versus the greenback. The economic policies of President Javier Milei have reined in the dollar value as he has blocked money printing and is rebuilding the greenback reserves of the central bank.