Around the world, the response to COVID-19, including lockdowns and store closures, has slowed all economic activity. In countries like Argentina where inflation reigns supreme, the situation continues to worsen. Faced with this situation, the demand for bitcoin has simply exploded.
The Argentine economy has been on a slippery slope for several years now. In 2019, the country experienced record inflation of 53.8%, a value not reached since 1991.
Earlier this week, the President Alberto Fernández announced that the country would not be able to make a payment of $ 500 million of debts due last Wednesday. This situation could put various foreign bond holders in default. Although Mr Fernández holds the presidency, many know that it is in fact his Vice President, Ms Cristina Fernández de Kirchner (the former President and wife to another former President) holds the true reign of power.
In these times of crisis, many Argentines are looking for an alternative solution to protect their money from inflation.
And thus, the demand for bitcoin in Argentina has been increasing since 2018, reflecting an increase of 1028% over the last two years.
This trend accelerated in April 2020, with a 24% increase in the volume of bitcoins traded on LocalBitcoins. The volume went from 37.6 to 46.9 million dollars, reaching a new all time high.
As the country plunges into crisis, more and more Argentines may well choose to take refuge in Bitcoin or other cryptocurrencies (such as stablecoins) to protect their economy and their purchase power.