Markets
Cryptocurrency trading volume in Argentine pesos grows 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, leading to the peso seeing the biggest rise as a cryptocurrency pair in Latin America, according to the latest State of LatAm Crypto Markets report from Kaiko Research.
The Argentine peso’s monthly trading volume against crypto has increased by 400% this year, by far the largest increase among its Latin American neighbors. Crypto 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 fell, according to Kaiko.
YTD Trading Volume Increase by Latin American Currency – Kaiko
The impressive jump, according to Argentines in the country, comes from fear-induced dollar purchases ahead of Milei’s election on November 19, 2023. This fear, according to José Luis del Palacio, co-founder of Argentine exchange Decrypto, is what led to the increased use of pesos on cryptocurrency exchanges.
“The demand is due to growing expectations ahead of last year’s election and the possibility of further devaluation of the peso,” he told The Defiant.
Del Palacio explained that before the elections “nobody was holding pesos” and that was what drove demand for digital dollars.
But when Milei’s government was elected, the devaluation did not occur. In fact, people had to sell dollars — dropping the free exchange rate from $1,300 ARS per USD to $970 because people had to pay their bills and other financial responsibilities, Del Palacio said.
However, now the market has “cleaned up” these 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 is falling at its steadiest pace since last year.
“It is quite expected that [Argentines] would use more pesos for crypto purposes,” said José Luis del Palacio, co-founder of Decrypto, an Argentine exchange.
“There has been a sharp decline in inflation, which may be leading to the Argentine peso being used more on local exchanges,” said Manuel Ferrari, co-founder of the Bitcoin-backed stablecoin protocol. Money in the chainand board member 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 the fifth consecutive monthly slowdown. The figure is the lowest since January 2022, when it hit 3.9%.
Still, with a monthly volume of $400 million, the Argentine peso (ARS) remains the lowest-volume fiat currency in the region, as it continues to have some of the highest annual inflation rates in South America, even as the rate of price increases begins to slow.
The annual inflation rate is at its highest point in decades, hitting 290% in April. The IMF predicts a significant reduction is on the way, with the country ending the year at an estimated 149% and 59% in 2025.
USDT advances
The surge 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 rate on a monthly basis and exchange controls limiting access to the US dollar, digital assets are a good option.
In between Latin Americait is difficult for individuals to gain access to USD, leading them to look for alternatives. According to Kaiko, the alternative of choice appears to be Tether USDT–with over 40% of all trades in the region using the stablecoin.
Bitcoin It is Ethereum ranked second and third respectively, while the second largest stablecoin on the market, USDCit’s not even a blip on the radar.
According to Del Palacio, the cryptocurrency market is starting to flow freely thanks to the gradual easing of restrictions by the Milei government. His words align with what industry leaders in the country are trying to do with Crecimiento, a Crypto Silicon Valley in Buenos Aires which is gearing up for its own pop-up city in August.
“We expect to see a plethora of other blockchain-based services being added to our local market,” he said.
And in terms of general usage, del Palacio said the trend is always upward for cryptocurrencies in Argentina, “as people and businesses trust global and private means of exchange more than the centralized local alternative.”
He concluded that the 400% figure is likely to fall below triple digits.