Argentina’s central bank recently placed limits on the volume of dollar that people can purchase each month. This is in a bid to stabilize the peso and strengthen the economy. The effect has been a higher demand on Bitcoin causing it to be sold at prices higher than the global average.
The Argentine economy has had hiccups in the past. Argentina’s president-elect Alberto Fernández recently selected an economic team with the mandate to turn the economy that is on the verge of ninth sovereign debt default.
Data from Ripio, a cryptocurrency exchange based in the country shows that while Bitcoin traded at $9,150 according to Coinmarketcap, it exchanged at ARS 633,862 or the equivalence of $10,578.
The recent measure by the Argentine central bank which pegged the limit of dollar an individual could purchase at $100 is the reason why Bitcoin is trading at premium rates in the country as investors search for means to circumvent the measure.
Right now, the price of #Bitcoin in Argentina is 30% higher than the rest of the world!— Satoshi Nakamoto (@realSatoshi_) October 30, 2019
The central bank of #Argentina slashed the limits on foreign currency purchases for citizens to just $200 with bank accounts and $100 in cash.
Bitcoin is financial independence 🔥 pic.twitter.com/NcszUyKzCw
Prior to the central bank restriction, Bitcoin traded at 12 percent higher in the country even among peer to peer exchanges such as Localbitcoins. The lowest offer seen on the exchange listed Bitcoin for sale at $10,805, 18 percent higher than the global average.
At Paxful, another peer to peer exchange, Bitcoin is traded even higher with the only offer available at $11,150. Despite the premium price, data from UsefulTulips.org shows that Bitcoin volume is increasing at the country’s Localbitcoins site.
In Argentina, Dai is trading at 71.6 pesos, while the U.S. dollar rate is at 56. That’s a huge premium to hold digital dollars. Reason: Tightening currency controls 💸💸— Camila Russo (@CamiRusso) September 18, 2019
Argentina’s $$ Premiums:
Black market USD: 7%
(h/t @rubendario222 for pic)
It is possible that the government policy would lead to greater adoption of Bitcoin in the country. Although the digital currency has not found much use as a means of transfer of value, many use it as a store of value.
Camilla Ruso, a journalist in a tweet highlighted that the policy has caused the value of DAI, the stable currency to rise.