Over the last two weeks, a new spike in BTC trading volume in Argentina has emerged amidst the country’s ongoing inflation crisis.
With inflation now estimated to be sitting at just over 25%, the Argentinian central bank, Banco Central de la República Argentina (BCRA), has hiked the base interest rate to an eye-watering 60% in an attempt to see off a full-blown monetary collapse.
According to many analysts including Michael J. Casey, senior advisor for blockchain research at MIT’s Digital Currency Initiative, the crisis has been the driving factor for an increase in Argentina’s rate of Bitcoin adoption. It has also been suggested – but not confirmed – that the Central Bank itself has taken positions in BTC to hedge against its own insolvency.
The country’s Partido del Red (Internet Party) has been pushing for a national policy of holding 1% of its reserves in BTC.
BASTA DE LUCHA PESO-DOLAR A 40 !
BASTA DE DOLAR. 1% de nuestras reservas en #BITCOIN y MINAR con nuestra infraestructura energética. Reforma del BCRA para ofrecer BTC y otras cripto.
Ley para la custodia y BTC moneda de uso legal. LIBERTAD.#ExpliquenElRumbo. pic.twitter.com/z1yGWE97L5
— Partido de la Red (@PartidodelaRed) August 30, 2018
Back in 2014, the Economist magazine forecast that Bitcoin “still has a long way to go to become a currency that can compete with established ones. That said, if Bitcoin keeps improving (better ease of use, less volatility and more liquidity) and Argentina’s monetary policy doesn’t, the country could one day indeed become a hotbed for the crypto-currency or its digital alternatives.”
Economist D.H.Taylor has espoused a similar viewpoint, concluding that, for many Argentinians, “The biggest solution is Bitcoin.” At the same time, Taylor indicates that he does “not believe the central bank’s actions in itself is going to be a catalyst for BTC moving higher. Instead, I see the push for bitcoin [coming from] the people of Argentina … I think this is going to be big. Very big.”