Report: Argentines turn to Bitcoin as inflation rises

Argentina’s 276% inflation rate fueled a Bitcoin buying spree: 34,700 BTC were purchased in the first week of March alone, the highest level in 20 months.

Argentines are increasingly looking to Bitcoin as a safe haven in the face of ongoing inflation and economic instability, with recent data showing a surge in purchases of the cryptocurrency.

As Bitcoin has experienced significant gains in recent months, hitting new all-time highs, and outpacing traditional inflation hedges such as the US dollar.

Argentina Bitcoin Purchases Surge

According to a Bloomberg report, weekly Bitcoin purchases in Argentina soared to 34,700 in the first week of March alone, the highest volume in the country in 20 months. The surge is more than double the level observed in early February, indicating that Argentines are growing interest in and adoption of Bitcoin.

As Bitcoin’s appeal as a safe-haven against inflation continues to grow, the cryptocurrency has witnessed huge gains, rising 73% year-to-date and reaching an all-time high of over $73,000. The surge was attributed to a number of factors, including the launch of the first spot Bitcoin exchange-traded fund (ETF) in the U.S. and anticipation of the upcoming halving event in April.

Argentina’s current inflation rate of 276% has eroded the value of the national currency, the peso, prompting citizens to seek alternative stores of value. Traditionally, the U.S. dollar has been the go-to choice for Argentines looking for stability in the midst of economic turmoil. However, the recent strengthening of the peso, coupled with the government’s efforts to stabilize the currency, has gradually weakened the attractiveness of the US dollar.

**Dollarization is still a distant prospect

President Javier Milei’s government has taken steps to address economic challenges, including efforts to clean up the central bank’s balance sheet. Although Milley campaigned on a promise to dollarize the Argentine economy, his approach since taking office has focused on managing the valuation of the peso rather than dollarizing it immediately. He also said that full dollarization is still a distant prospect.

The shift to Bitcoin as a safe-haven against inflation and economic uncertainty has also led to a decline in demand for traditional assets, including digital tokens pegged to real-world currencies such as USDT and USDC.

Argentina has a history of economic instability, with its currency depreciating frequently, which poses challenges for residents to save and manage their finances. The desire to avoid the fallout from the peso’s depreciation, high inflation, and restrictions on access to foreign currency has increased the country’s interest in cryptocurrencies.