Cryptocurrencies are Coaxing Argentines and Turks Amid Inflation

Argentina and Turkey are battling inflation and economic instability, causing deviation toward digital coins, mainly USDC and USDT. Inflation rates in March 2023 were 104% and 50.51%, respectively. Customarily, crypto adoption tends to be higher in countries with capital restrictions and political and financial instability. 

Argentines and Turks Are Loving Cryptocurrency

As per the data from GWI, Turkey leads the race for the highest crypto ownership with 27.1%, and Argentina comes second with 23.5% possessions. The global crypto-ownership rate is estimated to be around 11.9%. Interestingly these countries have another similarity. Both are battling high inflation. 

The Argentinian peso traded at 646 per U.S. Dollar in the black market, while the official exchange rate is around 222. Private economists speculated that Gross Domestic Product (GDP) would drop by 3% in 2023. Central Bank is also running low on net cash reserves, with a current estimated value of $1.3 Billion; total reserves are less than 50% compared to 2019. 

The rising risk of potential currency devaluation is causing people to buy the U.S. dollar, invest in crypto, hold exports, and speed up imports. 

Turkey is also battling economic instability, and problems worsened with two devastating earthquakes hitting the country on February 6, 2023, where direct losses were around $34.2 Billion. 

Both countries invest most in stablecoins like USD Coin (USDC) and Tethers (USDT). Both of them are pegged 1:1 with the U.S. dollar. This feature provides investors with an alternative to the already scarce dollar in the country. 

Ehab Zaghloul, a chief research scientist at Tribal Credit, a digital payment platform for startups in emerging markets, argues that people on both the retail and institutional sides are looking for an alternative to hedge against the devaluating currency. They wish to hold additional assets which are pegged to a stronger currency. USDT and USDC are providing relief in uncertain scenarios. 

Interestingly, the trading volume for the USDT-Turkish lira pair reached new heights, gaining 141.02% from May 2022. The weakening Turkish currency and forthcoming presidential and parliamentary elections supposedly drive the rally. 

Despite being inherently volatile, cryptocurrencies provide a safe haven during economic uncertainties. Similar thoughts were shared by Democrat Presidential candidate Robert F. Kennedy Jr., Who is believed to be a Bitcoin proponent, and the crypto community rejoiced to see someone carrying the baton. 

When a country’s economy declines, its currency devaluates, and prices go sky-high. Cryptocurrencies, especially stablecoins, could provide viable alternatives. Their global scale and multiple use cases prove their efficiency during hard times. Despite losing some traction on the global scale, U.S. Dollar is still a currency with great value.  

Disclaimer:

The views and opinions stated by the author, or any people named in this article, are for informational purposes only and do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.

Andrew Smith

Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages ​​and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.