Bitcoin may be down for the count today, but it’s still garnering plenty of attention and respect. Regions such as Argentina and Hong Kong, for example, are willing to pay premiums on the top cryptocurrency despite its latest drops, suggesting just how strong and popular it is in developing nations.
Argentina Is Becoming a Major Bitcoin Haven
While Argentina isn’t quite in the same state as its “continental neighbor to the north” Venezuela, election uncertainty in the nation has caused its national currency, the peso, to drop by more than 30 percent over the past few days. On exchanges such as LocalBitcoins.com, bitcoin was trading for as high as $12,000 in the country of Argentina. This is about ten percent higher than where it stands on most other trading platforms.
In Hong Kong, where people are protesting the notions of communism and seeking independence from the mainland Chinese government, bitcoin was trading for a roughly four percent premium. Despite the breadth and width of the protests (they’ve been going on since June), many are now in fear that government forces will consider extreme forms of retaliation.
Rayne Steinberg, the chief executive officer of crypto hedge fund Arca in Los Angeles, explains:
Bitcoin is becoming the asset of last resort in areas of extreme currency devaluation and political uncertainty. In the last week alone, bitcoin is up by approximately 50 percent against the Argentine peso and trading at a significant premium on local exchanges, and they are not alone, joining the ranks of Venezuela, Hong Kong and Turkey who have also experienced similar shocks.
Venezuela’s national currency, the bolivar, has fallen even further than the peso. Inflation and economic disaster are so prominent within the socialist country that many market shelves are bare, and citizens have resorted to attacking zoo animals to put meat on their tables. While the country sought to implement a new payout system for workers utilizing the country’s official cryptocurrency (the Petro), the idea initially failed to catch on, and Venezuela’s economic infrastructure remains in disarray.
Is Bitcoin Truly the Answer?
Bitcoin and other cryptocurrencies (like Dash) have proven to be very popular and useful in countries such as these. The problem is that these assets remain volatile, as we’ve witnessed in just the last 24 hours alone. Bitcoin, for example, has fallen by more than $400 in just the last day, and that price was a fall of roughly $800 from the previous week. There are concerns that Venezuela, Argentina and other areas resorting to bitcoin may just be trading one seriously volatile asset in for another, which isn’t likely to do much in terms of national stabilization.
Alex Kruger, a crypto trader, has mentioned that if Argentinians really seek to protect themselves, their best bet is to purchase American dollars.