Latin American countries have been seeing an increase in crypto activities and the same is applicable in the case of Argentina. The country is currently dealing with high inflation, similar to other countries around the world. The uncertainty about the economic future of Argentina has increased after Martin Guzman, the Minister of Economy in Argentina, tendered his resignation. After his resignation, crypto activities in the country appear to have skyrocketed.
Crypto popularity in Argentina
The fiat currency in Argentina has been depreciating rapidly, which has become a major point of concern for people. Those looking for a safe haven have turned to cryptocurrencies for preserving their wealth. There has been a significant increase in the trading volumes of different stablecoins, specifically Tether, as its purchases have gone up.
There has been high inflation in Argentina for about four decades. The economic growth of the country has also been affected due to high foreign debt, inefficient production, and dictatorship. The economic woes of Argentina have also deepened because of the fuel crisis and the coronavirus pandemic.
In 2019, Martin Guzman became the Minister of Economy and he made a great deal of progress during his tenure. This included bringing down the public foreign debt. He also provided the underprivileged people in the country with food cards and bonuses. However, inflation in the country has remained a constant problem and it increased to almost 60% in the month of May.
Guzman was forced to resign due to these high levels of inflation, the pressure from political parties, and the increasing shortage of diesel. After his resignation, Argentinians had become concerned about the depreciating value of the peso, so they decided to shift their money into stablecoins that are pegged to the US dollar, with Tether being the most popular option.
Many exchanges saw a greater volume of Tether (USDT) stablecoin being bought with the Argentinian peso and the price also went up. The cost of one USDT on Binance was approximately 270 ARS. Since inflation in Argentina has gone up, the crypto activities in the country have also gone up. A report from Chainalysis showed that in terms of crypto adoption, Argentina is in the tenth spot.
Inflation boosts crypto adoption
Countries that have a high inflation rate have seen their crypto trading activities increase. There is an extreme level of inflation in Turkey as well. They have also seen their currency depreciate and have had trouble restoring it to its previous levels.
Therefore, the Turkish citizens have done the same thing that Argentinians are doing i.e. turning to cryptocurrencies like Tether and Bitcoin for protecting their wealth. Stablecoins are considered an excellent store of value because they are pegged against fiat currencies in a 1:1 ratio. They can protect people from the volatile nature of cryptocurrencies and offer a stabler option.
However, the stablecoin market has also faced turmoil recently with the crash of the TerraUSD (UST) stablecoin, along with its sister crypto called LUNA.