Terrible inflation in Argentina: the population takes refuge in stablecoins

A sudden and unquenchable thirst – Purchases of stablecoins jumped on the cryptocurrency exchanges in Argentina during the weekend of July 2 and 3 when the country was shaken by the departure of one of its ministers.

Stablecoin fever in Argentina

L’inflation recorded a 60% increase in May this year compared to the rate in the same month, in 2021. The reserves of the country’s Central Bank are running out. The consequences are felt in imports.

Moreover, with a raging economic crisis, the resignation on July 2 of the Minister of the Economy, Martin Guzmantriggered a stablecoin rush in Argentina.

Argentines therefore rushed to the platforms to buy 2-3 times more of stablecoins during this weekend, compared to the purchase volume observed at the end of the week “normal”. What has stung the population? Argentinians would seek, in stablecoins, a hedge to protect themselves from the faltering value of the peso.

On 2 of the largest local cryptocurrency exchanges, the departure of Martin Guzmán was then enough to depreciate the course of the peso about 15%, compared to Tether (USDT) and DAI. The price of the 2 stablecoins reached 280 ARS during the weekend, compared to 245 ARS on Friday.

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Markets on fire, a profitable loop for the DAI

The appointment of Silvina Batakis to the post of new Minister of the Economy, on July 3, did not cool the markets. The price of Tether on Argentine crypto exchanges has reached 303 AR following this event.

The Argentinian crypto platform Buenbit even evokes a 300% increase exchanges that day. In addition to this jump in trade, the company described a hellish trading cycleto the benefit of the DAI, which further weakened the Argentine peso.

” Many people “ would have used their DAI as a guarantee in order to obtain loans in Argentine pesos. These pesos were used, in turn, to acquire more DAIs. The goal? Protect against further possible devaluations of the fiat currency.

L’adoption of cryptocurrencies thus feeds on the setbacks of fiduciary currencies. This hello to financial institutionswhich offers cryptocurrency trading from the Argentinian Central Bank, can’t be enough then to stem the adoption of an asset class perceived as hedging assets in a country plagued by a high inflation.

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