Why Is The Argentinean Recession Good News For Bitcoin?

Attempting to subdue the price of the Argentinian Peso, which already fell by 34% against the US dollar since the start of August, the government decided to limit the purchase of foreign fiat currency.

In an effort to stabilize the national currency, the Argentinian government imposed capital controls, limiting individual citizens to only $10,000 on a monthly basis.

Referring to the government’s decision, lead attorney of crypto advisory firm Byrne & Storm, Preston Byrne, tweeted ‘Buy Bitcoin’ on his profile. Taking a look at crypto trades on local exchanges, the last week experienced a surge in trading volume concerning the Argentinian peso. If the situation would follow the fate of Venezuela, trading volumes would continue to increase.

Mauricio Macri, who has been in office since his successful election in 2015, rationalized the decision by stating that tighter control on foreign assets will lead to ‘the normal functioning of the economy’.

The decision on capital controls will last until the end of the year. However, if the Argentinian Peso were to destabilize further, the government would reenact the decision, if not even tighten it further.

At the current rate, Argentina may lose its net reserves of $15 billion if the national currency were to continue to plummet. The situation appears appalling as the government failed to repay its short-term debt, which led to escalating interest rates.

In an ironic turn of events, Mauricio Macri followed the steps of previous leaders who he dearly criticized, employing the same historical measures which led to previous periods of instability.

While Argentina is not even close to the situation Venezuela reached, the country’s citizens may decide to convert their savings to bitcoin ahead of time. Reported by Cointelegraph in March 2019, a VC investor named Tim Draper decided to meet with the Argentinian president, urging him to resort to blockchain technology and cryptocurrencies in an attempt to prevent another financial disaster.

According to Draper, the billionaire investor made a bet with the President, proposing that he would ‘double his investments in the country if the peso would be valued higher than Bitcoin.’ However, the president would need to declare bitcoin as a national currency if the national peso didn’t match higher than Bitcoin. Draper believes that the decision would bring back confidence in the cryptocurrency.

Crypterium is leading fintech startup awarded by KPMG and H2Ventures. Our goal is to ensure anyone can store, send, exchange and spend digital currencies with the same ease as traditional money.

Crypterium is led by the former General Manager of Visa Central & Eastern Europe, Steven Parker, and C-level executives from global financial institutions like Renaissance Insurance, London Derivatives Exchange, American Express, etc.

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