Bitcoin was reportedly trading at an 8 percent premium and hit $12,300 on popular Argentinian Bitcoin exchange Buenbit. This comes shortly after the country’s current president, Mauricio Macri, lost a primary vote, hinting at the potential re-election of the previous president, Cristina Fernandez. Traditional markets tumbled, and apparently, people turned to Bitcoin as a safe haven once again.
Bitcoin Surges to $12,300 in Argentina
The world’s largest cryptocurrency by market value surged to as high as $12,300 on popular Bitcoin exchange Buenbit. Bitcoin currently trades at around $11,400 on other major exchanges, signaling an 8 percent premium.
Bitcoin is surging in Argentina, trading at ~$12,300 on @buenbit, a premium versus ~$11,400 on Coinbase, where it’s having a relatively quiet day. There’s a bloodbath in argie markets today after Macri lost in a primary vote and people fear the return of populism. (1/2) pic.twitter.com/EJdqATZn8L
— Camila Russo (@CamiRusso) August 12, 2019
Ex-Bloomberg reporter Camila Russo also noted that Argentines can currently buy US dollars freely, but some are choosing Bitcoin as a store of value.
This, perhaps, shouldn’t come as a surprise. Amid Argentina’s political and economic turmoil, inflation rates hit 55.8 percent in June, the highest since 1992. What is more, the peso is tumbling against the dollar.
The most recent blow to Argentina’s economy came after the current pro-business president Mauricio Macri lost the preliminary presidential vote to his opponent, the former president Cristina Fernandez, by a whopping 16 points. While president, Fernandez nationalized the stake of the country’s oil company, Repsol, in a local company, YPF. She also took over the private pension system and intervened in the economy with serious restrictions on exports and currency controls.
All banks in the country were reportedly hit hard by the results of the vote. Moreover, the stock price of Grupo Financiero Galicia, a well-known financial services company in Buenos Aires with a market cap of upwards of $2.5 billion, plunged about 60%. Over 40% of the stock price of energy company Transportadora de Gas del Sur was also wiped out.
Bitcoin as a Hedge: A Growing Trend
Amid the aforementioned political and economic turmoil, people have turned to Bitcoin, giving further merit to the notion that it can be used as a store of value and a hedge regardless of local situations.
This also gives more credence to the idea that Bitcoin represents an asset which is negatively correlated to the traditional financial markets and their problems and hence is fit for use as a hedging instrument.
The fact that people in Argentina are even willing to buy it at a premium is sufficient enough. But it’s also not the only time Bitcoin has been used as a hedge.
Most recently, CryptoPotato reported that Bitcoin continues to perform well even as traditional markets continue to tumble amid growing trade tensions between the US and China.