When Argentina’s minister of the economy resigned over the weekend there was a rush to transfer the Argentine peso into dollar stablecoins. With many expecting the local currency to fall on the news, some paid premium prices just to get into the relative perceived safety of crypto.
It might be argued that Argentina has arrived at that point where the worst excesses of the fiat-backed monetary system have become apparent. The local currency has been so debased and devalued that citizens are looking for any other haven they can, including cryptocurrency.
When Martín Guzmán, now ex minister of the economy, tweeted that he was resigning last Saturday, the traditional stock market was closed, and wouldn’t be open again till Monday. Therefore, Argentinians had to make a quick decision, and many of them decided to buy dollar stablecoins, or “dólar cripto” as it is known locally.
According to an article on the Buenos Aires-based Rest of World speculation on the currency ran wild over the weekend. An expected devaluation on Monday meant that the peso was exchanged for stablecoins at a much higher volume than usual.
The article quoted Juan José Méndez, chief brand officer at Ripio, a digital wallet based in the country, who said:
“We saw stablecoin operations triple over the weekend,”
It was stated that the Argentinian peso stood at 240 pesos to one USDT stablecoin before the announcement. Once the news was out, the peso jumped as far as 270 to the dollar, and one exchange platform, called Lemon Cash, reported the peak at 300 pesos.
However, according to Argentinian traders and experts, the value of the black market dollar settled at around 250 pesos, and this was not anywhere near as bad as had been anticipated.
Given the benefit of hindsight, some are now saying that it was foolish to pay such high prices to get out of the Argentinian peso, although given the many decades of currency failure, local people are likely to be extremely skittish when it comes to holding pesos in uncertain times.
Yes, crypto has its own problems right now, but it came about to be used as a haven against mismanagement of the fiat economy. With the innovations that are taking place in the sector, crypto might yet serve as this haven.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Source: https://cryptodaily.co.uk/2022/07/argentinians-flee-to-crypto-in-economic-uncertainty