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Javier Milei, the newly-elected president of Argentina, is imposing shock measures to stabilize the Argentine peso, which saw a 211% inflation rate in 2023. In response, some Argentinians are turning to bitcoin to shield their savings from these economic pressures.
The Argentinian crypto exchange Lemon just saw its highest week of bitcoin purchases since 2022, according to data the company shared with Blockworks. This comes soon after bitcoin surged to an all-time high in price. Bitcoin (BTC) is currently trading for roughly $70,000, more than double or triple what it was trading for in the doldrums of 2023.
Lemon has been a go-to for many crypto-curious in Argentina, where Coinbase isn’t available, and where Binance only began operations recently. Blockworks spoke with Maxi Raimondi, Lemon’s chief financial officer, about his perception on Argentina’s flight to bitcoin.
Keep reading for excerpts from Blockworks’ interview.
Blockworks: Have you noticed that more of your clients are interested in getting exposure to bitcoin rather than to just the US dollar via stablecoins?
Read more: Stablecoins are ‘a better product’ than local currencies in emerging economies, Carrica says
Raimondi: Yes. Having this inflation rate, people work 30 days and they are collecting their salary on the last day of the month or the first day of the month. During the last period, we had inflation of about 30% per month. So at the very beginning [of the month], a lot of Argentinians are moving to stablecoins in order to take cover from that inflation and devaluation and to secure their own savings.
But we saw in the last month that a lot of people are also moving into bitcoin. The reason may be because of the bull market, maybe because of a lot of news about the halving, maybe because of what’s going on in the US with the ETF. We had an all-time high during February of about 40,000 weekly transactions of people willing to acquire bitcoins.
[Editor’s note: Lemon later shared internal data confirming this figure, and showed that stablecoins now account for just 67% of Lemon’s volume, down from 86% in October.]
Blockworks: Has it been a challenge being a fiat off-ramp in Argentina, where the currency is devaluing so quickly that if I pay you in pesos for some amount of crypto, the pesos could be worth some percentage less a month later?
Raimondi: It is quite a challenge to be a fintech right now in Argentina, but for us and the people in Argentina, it’s really what we’re used to.
You know, I remember in the past when hyperinflation took place in Argentina. I remember my parents collecting their salary and going out to the supermarket the same day. And I remember seeing queues and queues of people buying at the supermarket just to cover from the devaluation. And right now I do not see those kinds of things happen, because the people have access to other kinds of coverage such as what we provide.
Read more: Binance opens Argentina fiat on-ramps as inflation hits 100%
Blockworks: With all of these new clients purchasing bitcoin, I’m just curious, amid all the inflation, are people just buying their crypto and holding it or are they actually using it through Lemon’s payments rails?
Raimondi: If people buy crypto [like] bitcoin, it’s really hard to see them selling their bitcoin. However, if they will buy stablecoins — such as USDC or USDT, or DAI, whatever — they sell those [cryptocurrencies] in order to pay for their bills or [use] the payment service that we do have.
Blockworks: If inflation gets brought under control in Argentina with a lot of the shock measures being implemented, do you foresee demand for crypto going down? What’s Lemon’s plan to survive a potential reversal of the strength of the peso?
Raimondi: We have been thinking about that a lot. Not just Lemon, but the whole ecosystem may take a hit, but the people are on a daily basis using more and more of this type of fintech, not only because they can operate in Argentina, but also because they can transfer cross-border using the cryptocurrency. People may not have another alternative other than the stablecoin to dollarize them.
Read more: Argentina elects pro-Bitcoin president Javier Milei
Month after month we see more people getting into the fintech arena, although they know that the economy may unify the exchange rate in the near future. We see an opportunity in becoming a principal fintech instead of struggling against a traditional bank, and we see more people getting into fintech and leaving traditional banks.
This interview has been edited for brevity and clarity.