According to metrics, BTC demand in Argentina has been exploding for the last couple of months due to economic and financial uncertainties in the country. Many may be surprised to hear that these uncertainties are not necessarily caused by the COVID-19 pandemic, but by long-lasting loans that the country had accumulated over the years and is now struggling to pay them back accordingly.
Because of this struggle, the Argentinian government somehow missed a $500 million payment to this considerable debt of $65 billion on April 22nd, and it seems that the BTC community of the country reacted to it in a very unsettling manner.
Metrics show that Bitcoin trading popularity in the country has increased by more than 1028% ever since January 2018, exactly when crypto winter started and large coins such as BTC, ETH, LTC, and pretty much everything else lost more than half of their value seemingly overnight.
This tendency has now been revisited by Argentinean crypto traders over the last few months due to mounting financial issues in the country caused by both the massive foreign debt as well as the COVID-19 pandemic forcing multiple businesses to shut down and fling the economy into an even more severe recession.
Argentinian Peso Is Going Downhill
The local currency, the Peso has suffered quite a bit of damage ever since the financial issues of the country became apparent a few years ago. In 2019 alone, the currency suffered a nearly 54% inflation rate, which is absolutely disastrous for a capitalistic economy.
Naturally, most of it was due to political developments in the country and the expectations of thousands of investors absolutely shattering when an undesired candidate won the elections in the country.
Now though, it seems that the local population is starting to understand the mistake they made when they voted for this candidate, as he seems to have proven inadequate for taking care of this massive foreign debt situation. Not only did the government simply not negotiate some type of deal with the lenders, they just straight up did not make the payment.
For an already extremely speculative community of investors and traders in the country, this was an immediate signal that the government is not able to control the economy anymore, and it's time to bail while they can.
99% of the reason behind BTC's surge in the country is due to much less confidence in the local currency. This can easily be observed in other Latin American countries such as Venezuela for example.
In Venezuela, the population simply lives off-of cryptocurrencies such as Dash or Litecoin, because the local Bolivar is simply worthless. To put it in perspective, many locals have called their currency, slightly more valuable than toilet paper. Now, nobody would ever want their currency to be labeled as such, which is why the government developed the Petro, a cryptocurrency directly tied to oil.
Well, that didn't really go well in 2020, did it? Oil prices are in the minimum and are sure to not recover any time soon, the Petro itself was a failed project that the government had to force upon its citizens, and the use of Dash, LTC and BTC have more than doubled in the country once the word of cryptocurrencies spread thanks to this new government project.
Now, it's not very likely for the Argentine government to take the route of Venezuela and pump out cryptocurrencies like it was nothing, but default on a huge sum of that foreign debt is simply inevitable. And what does that do? That convinced current business owners that they may want to move to a different country, thus removing a lot of GDP and jobs from the local market as well as convince foreign investors that maybe this country is not the best place to invest money into right now.
Overall, it seems that the Argentine economy will be the most damaged out of them all after the COVID pandemic while having more than half of that damage caused by external factors.