Cryptoverse: Digital coins lure inflation-weary Argentines and Turks
Send a link to a friend
[May 02, 2023] By
Medha Singh and Lisa Pauline Mattackal
(Reuters) -Can inherently volatile cryptocurrencies become safe-havens?
Apparently they can in some parts of the world, such as Argentina and
Turkey, where soaring prices and tumbling local currencies have forced
people to seek refuge in digital coins.
Ownership of digital currencies in Turkey was the highest in the world
at 27.1% followed by Argentina at 23.5% -- well above global crypto
ownership rate estimated at 11.9% -- according to data from research
firm GWI.
What's common to Turkey and Argentina besides their pole positions in
crypto adoption is high inflation, which has led to crumbling currencies
and capital controls to deter local residents from taking money out.
Turkey's annual inflation was 50.51% in March, Argentina's was even
higher at 104%.
The lira and peso have been plunging and are at record lows. Argentina's
peso trades around 464 per dollar in the black market, more than double
the official exchange rate of 222.
Much of the safe-haven buying has been of stablecoins such as USD Coin (USDC)
and Tether (USDT), which are crypto tokens pegged one-to-one to a
traditional asset such as the U.S. dollar or gold, giving investors an
alternative to scarce dollars.
![](http://archives.lincolndailynews.com/2023/May/02/images/ads/current/goodman_sda_SHG_2023.png)
"Folks, whether they're on the retail side or institutional side, are
thinking about how can we hedge against currency devaluation," said Ehab
Zaghloul, chief research scientist at Tribal Credit, a digital payments
platform for startups in emerging markets.
"They want to potentially hold additional assets pegged to a stronger
currency, so, things like USDC or USDT or anything pegged to a stronger
currency like the U.S. dollar."
Trading volume for the USDT-Turkish lira pair reached a multi-month high
last week, driven by the weakening of the Turkish currency and the
upcoming landmark presidential and parliamentary elections, Kaiko
analyst Dessislava Aubert said.
[to top of second column] |
![](../images/050223PIX/busine46.jpg)
Souvenir tokens representing
cryptocurrency Bitcoin plunge into water in this illustration taken
May 17, 2022. REUTERS/Dado Ruvic/File Photo
![](http://archives.lincolndailynews.com/2017/Jul/22/images/ads/current/rohlfs_lda_072017.png)
"In general, crypto adoption tends to be higher in countries with
capital restrictions, financial instability, and political
instability," analysts at K33 Research wrote.
GLOBAL CRYPTO FEVER
While bitcoin, the world's biggest and best-known cryptocurrency, is
up 72% this year at $30,000, its highest in 10 months, overall
trading volumes are far from levels seen last summer after investors
were spooked by a series of collapses of crypto players culminating
in FTX's demise.
Trading volumes for spot bitcoin are highest during U.S. opening
hours, with little change from 2022, Kaiko data showed.
However, regulatory issues faced by crypto exchange Binance in
recent months have led to a slight shift in derivative trading
volume towards Asia Pacific hours from Americas, Kaiko said.
If dollar to crypto volumes are excluded, then the next most
dominant currency is South Korea's won.
Crypto trading volumes in South Korea are back to levels seen in
first quarter and second quarters of 2022 after a weak fourth
quarter in 2022, analysts at crypto investment firm Matrixport said.
"The dominance of altcoins makes South Korea a very interesting
market to analyse," Matrixport analysts said.
"This is in stark contrast to other crypto exchanges where bitcoin
and Ethereum account for the majority of the volume."
(Reporting by Medha Singh and Lisa Mattackal in Bengaluru; Editing
by Vidya Ranganathan and Sam Holmes)
[© 2023 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |