Inflation Skyrockets, Argentinians and Turks Seek Refuge in Crypto
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Inflation Skyrockets, Argentinians and Turks Seek Refuge in Crypto
Liputan6.com, Jakarta As inflation continues to hit Argentina and Turkey, citizens of these countries are turning to cryptocurrencies as a safe haven, seeking protection from their local currency collapsing.
Reporting from CryptoPolitan, Monday (8/5/2023), digital currency adoption is very high in both countries, with Turkey leading the world with a holding rate of 27.1 percent, followed by Argentina at 23.5 percent, significantly higher than the rate estimated global crypto holdings of 11.9 percent, according to research firm GWI.
Inflation Control and Capital Drive Crypto Adoption
Both Argentina and Turkey are facing high inflation rates, causing their local currencies, the peso and lira, to fall to record lows. In March 2023, Turkey’s annual inflation rate reached 50.51 percent, while Argentina’s soared to 104 percent.
Capital controls in both countries are increasingly deterring residents from taking out money, pushing them towards cryptocurrencies for financial stability.
Stablecoins, such as USD Coin (USDC) and Tether (USDT), which are tokens crypto pegged one-to-one to traditional assets such as the US dollar or gold, have become a popular alternative for Argentinians and Turks looking for scarce dollars.
Ehab Zaghloul, chief research scientist at Tribal Credit, said people were looking for ways to hedge against currency devaluation by holding assets pegged to a stronger currency such as the US dollar.
Crypto Adoption and State Political Instability
Kaiko analyst Dessislava Aubert notes trading volume for the USDT-Turkish lira pair hit a monthly high last week, driven by the weakness of the Turkish currency and the upcoming presidential and parliamentary elections.
K33 Research analyst added that crypto adoption generally tends to be higher in countries with capital restrictions, financial instability, and political instability.
Even though Bitcoin is up 72 percent this year, and once reached USD 30,000 or equivalent to IDR 440 million (assuming exchange rate IDR 14,674 per US dollar), a 10-month high, overall trading volume has not returned to levels seen last summer after a string of crypto players collapsed .
Disclaimer: Every investment decision is in the hands of the reader. Study and analyze before buying and selling Crypto. Liputan6.com is not responsible for profits and losses arising from investment decisions.
Inflation Skyrockets, Argentinians and Turks Seek Refuge in Crypto
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Inflation Skyrockets, Argentinians and Turks Seek Refuge in Crypto
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