Markets
Cryptocurrency trading volume in Argentine peso increases by 400% this year
Argentina’s local currency is the fastest growing cryptocurrency pair in Latin America.
Argentines are increasingly using their local currency to trade digital assets, prompting the peso to see the biggest surge as a cryptocurrency pair in Latin America, according to the latest State of Latin America Crypto Markets report. report from Kaiko Research.
Monthly trading volume of Argentine pesos against cryptocurrencies has increased 400% this year, by far the largest increase among its Latin American neighbors. Cryptocurrency trading volume against the Colombian peso was the only other pair to increase, but only by 40%, while trading against the Brazilian real and Mexican peso declined, according to Kaiko.
Year-to-date trading volume up against Latin American currency – Kaiko
The impressive jump, according to Argentines in the country, comes from fear-driven dollar purchases ahead of Milei’s election on November 19, 2023. That fear, according to José Luis del Palacio, co-founder of Argentine exchange Decrypto, is what has led to the increase in the use of pesos on cryptocurrency exchanges.
“The demand is driven by increased expectations ahead of last year’s elections and the possibility of an even greater devaluation of the peso,” he told The Defiant.
Del Palacio explained that before the elections, “nobody was left with pesos” and that is what boosted the demand for digital dollars.
But when Milei’s government was elected, the devaluation did not happen. In fact, people had to sell dollars, causing the free exchange rate to drop from ARS 1,300 to the dollar to $970, because people had to pay their bills and take care of other financial responsibilities, Del Palacio said.
But now the market has “cleaned out” those savings and the dollar is back to $1,350.
Slowdown in inflation
Argentines are now more willing to transact in their local currency as the country’s inflation rate falls at its fastest pace since last year.
“It is quite predictable that [Argentines] “We would use more pesos for crypto purposes,” said José Luis del Palacio, co-founder of Decrypto, an Argentine exchange.
“There has been a marked decline in inflation, which could lead to increased use of the Argentine peso on local exchanges,” said Manuel Ferrari, co-founder of the Bitcoin-backed stablecoin protocol. Money on the chainand member of the board of directors of the NGO Bitcoin Argentina.
Official data from the country’s National Institute of Statistics and Census (INDEC) shows that inflation in May was 4.2%, marking a fifth consecutive monthly deceleration. The figure is the lowest since January 2022, when it reached 3.9%.
However, with a monthly volume of $400 million, the Argentine peso (ARS) continues to be the most traded fiat currency in the region, as it continues to have some of the highest annual inflation rates in South America, although the rate of price increases is beginning to decline.
The annual inflation rate is at its highest level in decades, reaching 290% in April. The IMF predicts a significant reduction, with the country ending the year at an estimated rate of 149% and 59% in 2025.
USDT Takes the Lead
The increase in cryptocurrency trading volume in Argentina shows that as Argentines continue to seek savings and investment alternatives to the peso, with the currency still depreciating at a double-digit monthly rate and currency controls limiting access to the U.S. dollar, digital assets are a good option.
Through Latin AmericaIt is difficult for individuals to access US dollars, which is pushing them to look for alternatives. According to Kaiko, the alternative of choice seems to be Tether USDT– with over 40% of all trades in the region using the stablecoin.
Bitcoin And Ethereum trailing in second and third place respectively, while the second largest stablecoin on the market, USDCis not even a blip on the radar.
According to Del Palacio, the cryptocurrency market is beginning to circulate freely thanks to the gradual lifting of restrictions by Milei’s government. His words align with what the country’s industry leaders are trying to do with Crecimiento, a Crypto Silicon Valley in Buenos Aires which is preparing to create its own ephemeral city in Buenos Aires in August.
“We expect to see a plethora of other blockchain-based services being added to our local market,” he said.
In terms of overall usage, del Palacio said, the trend is still upward for cryptocurrencies in Argentina, “as people and businesses trust global and private means of exchange more than the local centralized alternative.”
He concluded that the 400% figure was likely to fall below three digits.