Argentina is not quite undergoing the pain of Venezuela but it’s beginning to feel the economic pressure, driving numerous investors to Bitcoin as a safe haven for their pesos.
The Argentinian economy has shrunk by 4% during the second quarter, with President Mauricio Macri’s government announcing that it expects the economy to shrink further by 2.4% this year. One of the causes of the slump has been attributed to a drought that occurred early in 2018 which severely damaged soybean and corn production.
Fausto Spotorno, Director of the Buenos Aires-based Center for Economic Studies observed that the downturn was due to crop failure, saying: “That really hurt growth in the quarter… The second quarter is when we harvest soybeans and corn, so there was a big drop in agricultural production.”
As a result, peso’s value has fallen. This has affected the morale of both investors and savers, consequently opening them up to the Bitcoin market. Economist and mathematician D.H. Taylor writes:
“Argentinians are moving in large numbers out of their peso and into a more stable currency, BTC. The numbers being witnessed by the markets in BTC are surging from Argentina,” adding that “The stability being offered by the digital currency is far greater than the peso and Argentinians are moving in quickly.”
The Argentinian government is now looking at Bitcoin with real intent as the economy begins to falter and efforts by the Central Bank have made absolutely no impact. As a result, it’s been reported that the Central bank may even be considering investing their currency reserves into Bitcoin and US dollars to gain some stability in case of a further need to devaluate the peso.
In May of this year, a massive peso selloff forced the government to seek support from the International Monetary Fund (IMF), receiving a $50 billion bailout and contributions towards a public works fund as inflation continues to rise.
Meanwhile, the demand for BTC is rising with 12 ATMs scheduled for the capital Buenos Aries and plans to saturate the country with more machines, and more merchants are now accepting payments in Bitcoin.
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