
Argentina finds itself in the midst of an economic crisis, grappling with a staggering inflation rate of 276%. Uday Kotak, the founder of Kotak Mahindra Bank, weighed in on the country’s economic troubles, suggesting that it is natural for citizens to turn to Bitcoin as a hedge against the turmoil. He remarked, “When countries mismanage their macroeconomy, individuals seek to protect the value of their savings. Traditionally, this has been done through gold. However, now Bitcoin has also emerged as an option!” Kotak further questioned, “Considering Argentina’s inflation rate of 276%, wouldn’t Bitcoin be a better alternative to the Argentine peso?”
Bitcoin transactions in Argentina have surged to levels not seen in nearly 20 months. In the week ending on March 10, close to 35,000 Bitcoin transactions were recorded, double the average weekly volume from the previous year. This spike in activity is driven by Argentines’ desire to safeguard their wealth amid a recession and skyrocketing inflation, which is a result of President Javier Milei’s ‘shock therapy’ economic strategy. In the meantime, the peso has gained 10% against the US dollar since January, while Bitcoin has experienced an impressive 60% increase against the greenback.
In a remarkable turn of events, Bitcoin has achieved a new all-time high, surpassing the $73,000 mark. This surge comes despite a slight increase in US inflation, as investors remain confident that it will not hinder expected interest rate cuts by the middle of the year. Furthermore, the decision by the UK to allow certain Bitcoin-linked securities on its stock market has also contributed to the cryptocurrency’s rally, solidifying its status as a legitimate asset class. The rise of Bitcoin has also had a cascading effect on other cryptocurrencies, with Ethereum, BNB, and Dogecoin experiencing significant gains within a few weeks.
Bitcoin’s record-breaking ascent can be attributed to several macroeconomic factors, including the introduction of Bitcoin ETFs and improved accessibility. Raj Karkara, the COO of ZebPay, expressed optimism about Bitcoin and the broader crypto market, predicting a positive growth trajectory for 2024. Additionally, the upcoming Bitcoin halving event, which halves the block reward, is expected to create supply pressure and potentially drive further price increases.