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The shift in cryptocurrency preferences in Latin America
- USDT now dominates over 40% of cryptocurrency transactions in Latin America, surpassing Bitcoin in regional popularity.
- Inflation and monetary devaluation push Latin American traders towards stablecoins, considered more stable than the volatile Bitcoin.
A recent study by research firm Kaiko highlights a significant shift in the cryptocurrency landscape in Latin America. THE the report indicates that USDTa stablecoin, it now accounts for more than 40% of all cryptocurrency transactions in the region, surpassing Bitcoin, which has long dominated the market.
Source: Kaiko
The findings suggest a decline in interest in Bitcoin along with an increase in stablecoin trading. This trend marks a notable change, as Bitcoin has been the digital currency of choice in Latin America for many years. The study attributes the start of this change as early as 2023.
This preference for stablecoins over Bitcoin is believed to be influenced by the ongoing inflation issues in the region. Historically, inflation has driven cryptocurrency adoption in Latin America. Traders now appear to prefer stablecoins as they are seen as a more stable mechanism against the devaluation of local currencies.
Inflation has historically been a major driver of cryptocurrency adoption in Latin America, which may explain merchant preferences for certain tokens and now impacts the use of stablecoins.
Kaiko Report.
According to Kaiko’s report, trading pairs involving stablecoins and fiat currencies accounted for 63% of transaction volume over the past six months. The preferred stablecoins are those pegged to the US dollar, reflecting their use in transactions involving local fiat currencies such as the Mexican peso (MXN), Colombian Peso (COP)Argentine peso (ARS) and Brazilian real (BRL), you can read more about it in Crypto News Flash.
“BTC gained over 100% against the Argentine peso (ARS) and over 70% against the Brazilian real (BRL) between January and May, outperforming other fiat-denominated pairs in those months,” notes Kaiko.
The report also highlights Bitcoin’s significant appreciation against local currencies in 2024. For example, Bitcoin gained over 100% against the Argentine peso and over 70% against the Brazilian real between January and May.
This appreciation has made Bitcoin relatively more expensive, shifting the preferences of some traders towards more stable investments such as USDT and XRPparticularly in Mexico following the political changes driven by the election of Claudia Sheinbaum as president.
Despite the rise in popularity of stablecoins, Bitcoin continues to maintain value as a potential hedge against economic instability, providing an alternative for those in precarious financial situations. This is reinforced by the global increase in confidence in Bitcoin, especially after the approval of Bitcoin Bitcoin ETFs in the United States, a development that is also echoed in the Latin American market, you can read more about it in Crypto News Flash.
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