Resistance to government currency control policies, Bitcoin trading volume in Argentina surges by 50%

In recent days, the trading volume on the mainstream peer-to-peer trading platform LocalBitcoins has surged, with data indicating a growing demand for Bitcoin among the public in Argentina and Venezuela.

Argentina's economy continues to suffer a significant recession, with its official currency, the peso, losing over 85% of its value against the US dollar in the past five years. The economic crisis has been ongoing for 18 months, with an annual inflation rate of 55% and a debt level close to 90% of the GDP.

Argentine President Alberto Fernandez recently stated:

In reality, Argentina has defaulted on its debt, and the financial situation is comparable to the most severe debt crisis in modern times experienced in 2001.

According to reports, the country has tried various policies to reduce the high volatility of the peso, including strict capital controls implemented by the central bank in September this year to stabilize the value of the peso, which ultimately led to record-high Bitcoin trading volume each week.

As shown by data platform Coin.dance, in the week of December 21, Bitcoin trading volume increased from 21.5 million to 32.6 million, a growth of over 50%, setting a new record.

Previously, ABM reported that the Argentine central bank issued another ban in November, prohibiting consumers from using credit cards to purchase Bitcoin and other cryptocurrencies. While this policy aimed to slow down the capital outflow of domestic assets to Bitcoin, its effect turned out to be the opposite.

Apart from Argentina, Venezuela is possibly the country with the most severe hyperinflation in all Latin American countries. According to the International Monetary Fund (IMF), the extreme inflation rate of the Venezuelan official currency, the bolivar (VES), is estimated to be as high as 1,000,000%.

During the period from December 15 to 21, the LocalBitcoins trading volume in Venezuela also reached 24.8 billion bolivars (approximately 24.8 million US dollars), an 18.46% increase from the previous week and about 20.67% increase from the first week of December.

Given the long-standing severe economic imbalances, economists have offered many suggestions. Domingo Cavallo, a visiting professor at Harvard University, pointed out that Argentina's economy should be based on the US dollar and could consider pegging the Argentine peso to the dollar or adopting a dual or multiple currency system.

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