In times of unstable economies like that of Argentina, everyone puts into practice the maximum ingenuity to seek protection against inflation and prevent your weights from slipping like water through your hands. In this context, in recent months Argentines have been progressively migrating, ceasing to see the dollar as the only rescue to protect savings.
According to the US news agency, Bloomberg Línea, small savers gradually abandoned the dollar as a protection instrument against inflationary swings and the sharp increase in prices. Instead, they were adopting the digital assets as a mode of investmentespecially the cryptocurrency bitcoin, to reduce the impact of inflation.
So retail investors ventured to purchase the digital currency that has been all the rage since January, having recorded a significant jump in its price. This change in habit that led them to buy this digital asset occurred sharply “to protect yourself from a inflation of 276% instead of rushing to exchange pesos for dollars,” according to the news agency.
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Bitcoin, the leading crypto
Precisely, the level of Bitcoin purchase operations in the country reached its highest weekly value in the last 20 months on Lemon, the popular cryptocurrency exchange platform. It is the most chosen by small Argentine investors. Already ending the week of March 10 The crypto platform recorded almost 35,000 transactions of users who bought the capital B gold coin, which doubled the weekly average for 2023, BL noted.
This increase in crypto currency purchases was replicated by users of other exchange platforms, such as Ripio and Belo, which also gained popularity among Argentine savers in recent years. According to Ignacio Olivera Doll for the news agency, one of the main drivers behind the stronger peso in recent weeks is Milei’s strict control over the amount of money in circulation, not allowing it to grow while the central bank rebuilds its reserve. of dollars in cash.
For his part, Manuel Beaudroit, CEO of the Belo digital wallet, highlighted that the volume of Bitcoin and Ether has increased tenfold so far in 2024, compared to the same period of the year. And he added that “purchases of stablecoins, crypto assets often pegged to currencies such as the US dollar, fell to 60% from 70% in that periodas the rise of Bitcoin attracted more buyers,” according to the news agency.
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Habit change in savers
The truth is that since last December 10, there has been talk of a “chainsaw”, “shock” therapy, adjustments, cuts and a “blender”, while pockets suffer the impact. Argentines seek to carry out infinite maneuvers to survive a deep recession process that lethally combines with inflation levels that are among the highest records in the world.
In this framework, we are experiencing moments in which the situation pushes consumers and savers to change their behaviors. With this panorama, Argentina is currently presented as one of the countries with the highest levels of cryptocurrency adoption in the world. So, exchange users multiply in the first two months of the yearleaving behind the traditional reservation system: the exchange of pesos for dollars.
It should be noted that the main reason that prompted the abandonment of the dollar as the preferred refuge for savers is given by the exchange market. As reported by Bloomberg, “the commonly used parallel exchange rate strengthened 10% against the dollar, while Bitcoin skyrocketed almost 60%” against the currency in the same period.
Likewise, Beaudroit highlighted the behavior of Argentine savers in the face of the changing situation. “The user decides to buy Bitcoin when they see news that the currency is going up, while the purchase of stablecoin is more pragmatic and is often used for transaction purposes, as a vehicle to make payments abroad,” he noted.
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Largest dollar holder
In turn, Olivera Doll reported that Argentina, along with Russia, are the main dollar-holding countries globally. “Savers in the South American nation own around USD 200 billion in US currency, a figure second only to the United States and Russia”, according to the analysis of Argentine economist Nicolás Gadano based on data from the Central Bank, which was cited by the news agency.
However, when the context changes, those who operate within a country’s economy also strive to survive and adapt with new habits. For this reason, the agency highlights that now “Argentines are getting rid of part of their savings in dollars” and exploring “investment options that allow them, for the first time in years, to protect themselves from inflation.”
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The risk of scams increased fivefold
The change in behavior was not free, always leaving the classic strategy and leaving the comfort zone usually entails the possibility of having to take greater risks. As Gabriela Battiato, legal head of Bitcoin Argentina, told BL, “the desperation of Argentines to make ends meet and not lose their savingsleads them to make hasty decisions without measuring the risks, making them easy prey for scammers.”
In the same sense, the country’s main non-governmental organization within the sector, added that “there was a five-fold increase in reports of scams with cryptocurrencies in February”, as a result of the change in habits of small savers.
FM