Indian banker Uday Kotak, founder of Kotak Mahindra Bank, has taken to social media to comment on Argentina's economic struggles. He linked the country's staggering 276% inflation rate to poor macroeconomic management, resulting in a preference for bitcoin over the US dollar among Argentines looking to hedge their assets.
Argentina currently faces one of the highest annual inflation rates in the world at 276%. As the value of the peso plummets, Argentines are turning to bitcoin as an alternative to the U.S. dollar, according to a Bloomberg report. The trend reflects a broader shift away from traditional safe havens like the dollar.
Kodak, in a tweet, compared Bitcoin's use during economic turmoil to gold as a store of value. „When countries mismanage their economies, savers seek to protect their savings,” he said. „Traditionally, it was gold. Now, Bitcoin too!”
While acknowledging bitcoin's growing popularity as an inflation hedge, Kodak expressed reservations about its long-term viability. „Although I'm not convinced about bitcoin, wouldn't it be preferable to the Argentine peso with 276% inflation?” He questioned.
Bitcoin purchases in Argentina, a global leader in cryptocurrency adoption, hit a 20-month high on Lemon, the country's most popular retail crypto exchange, according to Bloomberg. Lemon recorded nearly 35,000 bitcoin purchases in the week ending March 10, doubling the average weekly volume from last year.
The surge is being driven by Argentines seeking to preserve wealth during a recession and rising inflation under President Javier Mili's „shock therapy” economic policies. Converting pesos to dollars, the traditional safe haven, has become less attractive. Over the past two months, the black market exchange rate for the peso has strengthened 10% against the dollar, while Bitcoin has gained nearly 60% against the greenback, according to Bloomberg.
Manuel Beaudroyd, CEO of digital wallet Belo, announced that Bitcoin and Ether trading volume will increase tenfold in 2024 compared to the same period last year. He also noticed demand shifting, with purchases of stablecoins (the crypto pegged to currencies like the US dollar) falling from 70% to 60% as Bitcoin's rise attracts more buyers.
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