The Argentine peso and government bonds plummeted amid the crushing defeat of incumbent President Mauricio Macri in the primary. Meanwhile, bitcoin at local trading floors is trading at $ 300 higher than the average market price, while at Localbitcoins – and at all at $ 1000.
It should be noted that international investors fear the victory of candidate from the opposition alliance "United Front" Alberto Fernandez, who in the past served as Prime Minister under the Peronist Presidents Nestor Kirchner and Christina Kirchner. Many consider his views too left-handed and are afraid of a return to the policy of active state intervention in the economy.
The comeback of Peronist Cristina Kirchner in Argentina leads straight to stock market crash. Merval collapses by a whopping 34%. Peso crashes 20%. https://t.co/Q7BYLpQvmF via @welt pic.twitter.com/txAXFYEHka
– Holger Zschaepitz (@Schuldensuehner) August 12, 2019
At the beginning of the trading session, the price of the Argentine peso paired with the US dollar fell by almost 30%, but then won back a few positions.
ARS / USD , TradingView data
Annual inflation is expected to reach 50%. According to some reports, more than 30% of the population lives in Argentina below the poverty line, and unemployment rates are double-digit.
During @mauriciomacri 's term, poverty has reached 32% and unemployment increased to 10%. Inflation is expected to be 44% this year – one of the highest in the world. By the end of the year, Argentina's economy will be 3.1% smaller than when Macri took office.
Define populist.
– Ferran PORTA (@FerranPorta) August 12, 2019
It is noteworthy that well-known community researcher Alex Kruger, who was born in Argentina, urged Bitcoin supporters not to use the country's national economic tragedy to popularize the first cryptocurrency and collect clicks.
I do believe everyone should have bitcoin. Argentines in particular. I am openly bullish bitcoin for multiple reasons. However, I don't think it is right to use a national tragedy to fabricate uninformed narratives.
– Alex Krüger (@krugermacro) August 12, 2019
“Argentines want to protect themselves from falling pesos against the dollar. To do this, they buy the dollar. "
He also added that there was a specific reason for the collapse – the likelihood of a "corrupt socialist regime" returning to power.
The next Argentine government will likely
– take over the central bank
– increase currency printing to finance deficits
– renegotiate or default foreign debt
– reimpose capital controls
– reimpose price controls
– increase tariffs & export taxes
– increase subsidies– Alex Krüger (@krugermacro) August 12, 2019
In his opinion, in case of victory, the Fernandez government will establish full control over the central bank, increase the money supply, begin negotiations on the restructuring of public debt, introduce control over capital flows and price controls, and increase export tariffs and subsidies.
Some observers also found that on some OTC sites, the price of bitcoin exceeded the average market price by $ 2,000.
Thanks @Mariandipietra for pointing it out, P2P Bitcoin OTC on Argentina usually refers to this price for trade. So the ARS pricing there is ~ $ 13448, does see a pretty high premium (over $ 2000 more!)
Now the question is how long such premium has lasted? why arb didn't happen? https://t.co/5seqrUcf5Z pic.twitter.com/Wv7SEo1vHf
– Dovey Wan ? ? (@DoveyWan) August 12, 2019
Primitive Ventures managing partner Dovi Wang pointed out that the bitcoin market in Argentina lacks liquidity. What, in her opinion, can not be said about China.
It seems like Argentina, unlike China, does see a Bitcoin premium (localbitcoin, ~ $ 1000 premium) any exchange there has decent liquidity?
The key diff is: In China there is sufficient local supply of Bitcoin (miners, exchanges etc) but Argentina is lacking local liquidity
– Dovey Wan ? ? (@DoveyWan) August 12, 2019
She is sure that the Chinese do not use bitcoin as a protective asset against the backdrop of the devaluation of the renminbi as part of the US-China trade war, as the community believes. In evidence of her words, she cites the fact that last week the price of bitcoin in China was below the average market.
"Chinese buying up Bitcoin" is a VERY dubious narrative IMO
1. Bitcoin is trading at a negative premium in Chinese centric exchanges like Huobi and Okex
2. RMB denominated OTC price is now at 1% premium, within its normal range since the bull
– Dovey Wan ? ? (@DoveyWan) August 5, 2019
if they really want to hedge global financial uncertainty, especially local currency devaluation, Tether is the go-to place .. instead of Bitcoin (sorry to let you guys down). BTC is more a long term hedge by some high net worth ppl
However, Tether is now at negative premium too
– Dovey Wan ? ? (@DoveyWan) August 5, 2019
The Block analyst Larry Chermak agrees with her, who discovered that last week, Bitcoin and Tether prices in China were 2% lower than the market average.
Both Bitcoin and Tether are trading at about 1% discount in China. It traded at as much as 2% discount last week shortly after the devaluation of Yuan. This suggests that BTC is currently not acting a safe haven in a country where it is arguably needed the most. https://t.co/kEXpFmp6EH
– Larry Cermak (@lawmaster) August 12, 2019
Recall that at the end of July, the weekly trading volume of bitcoin on LocalBitcoins in Venezuela exceeded 68 billion bolivars, updating the historical maximum.
Subscribe to BlockchainJournal news on Telegram: BlockchainJournal Feed – the entire news feed, BlockchainJournal – the most important news and polls.
BlockchainJournal.news
BlockchainJournal.news
