The price of Bitcoin has registered all-time highs against some of the world’s most inflation-prone fiat currencies. Over 30 hours spanning October 23 to 24, Bitcoin notched record prices against currencies, including the Argentine peso, Nigerian naira, Turkish lira, Laotian kip, and Egyptian pound. Significantly, this ascension can be attributed to the ongoing depreciation of these currencies, a situation worsened by Bitcoin’s recent 16% surge in price.
Inflation rates and government responses
According to data from the International Monetary Fund (IMF), several currencies are undergoing rampant inflation. The Venezuelan bolivar tops the list with an astounding 360% annual inflation rate, followed by currencies like the Zimbabwean dollar and the Sudanese pound. Additionally, the Argentine peso and the Turkish lira have also been substantially devalued, with annual inflation rates of 122% and 51%, respectively. The International Monetary Fund’s data shows that Turkey’s annual inflation rate is 51% and Nigeria’s is 25%, making their currencies the sixth and 15th most inflated, respectively. Consequently, the role of cryptocurrencies like Bitcoin in mitigating the harsh impacts of inflation cannot be underestimated.
Although some governments haven’t been welcoming to the cryptocurrency industry, there have been significant changes recently. For instance, Nigeria recently revealed plans to introduce a bill recognizing cryptocurrencies as “capital for investment.” This move comes after its central bank barred local banks from offering services to cryptocurrency exchanges in early 2021. Heat map of countries in the world with corresponding annual inflation rates. Source: IMF
Cryptocurrency transactions in Nigeria have surged by 9% year-on-year, amounting to an impressive 56.7 billion as of June 2023.
Meanwhile, Turkey, despite being home to a crypto-curious population threatened by a high inflation rate, has banned the use of cryptocurrencies for goods and services. However, it is also exploring the digitalization of the Turkish lira through a central bank digital currency (CBDC).
In Argentina, the upcoming presidential election could have ramifications for its ongoing inflation crisis. Current Minister of Economy Sergi Massa is advocating for a CBDC to tackle inflation. His competitor, Javier Milei, has a drastically different vision: adopting the U.S. dollar and abolishing Argentina’s central bank.
Despite policy uncertainties, cryptocurrency adoption is on the rise, particularly in inflation-affected countries. A September 12 report by Chainalysis indicates that Nigeria, Turkey, and Argentina hold the second, 12th, and 15th positions in global cryptocurrency adoption. Hence, as governments grapple with monetary policies and the effects of rampant inflation, digital assets like Bitcoin continue to forge their path, serving both as a speculative investment and a potential bulwark against financial instability.
Source: https://www.cryptopolitan.com/bitcoin-price-reaches-all-time-high-against-the-nigerian-naira-peso-and-lira/