Crisis in Argentina grips the headlines today. The Argentine peso (ARS) collapsed 30 percent in a matter of minutes yesterday while the stock market caved 48 percent before recovering.
Bitcoiners quickly jumped on the narrative to promote the world’s dominant cryptocurrency. Many claimed that bitcoin was “surging” in Argentina while others encouraged locals to “find safety” in bitcoin.
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
But the narrative was quickly slammed with hard reality and facts from Alex Kruger, a macro trader and Argentine local. Far from rushing to bitcoin, he said locals are seeking refuge in the dollar and pointed to tiny BTC volumes in Argentina yesterday.
“Before bitcoiners start using Argentina (my country) as excuse to yell “Buy Bitcoin” and generate clicks and sell newsletters. Argentines want to protect themselves against the peso losing value versus the dollar. And for that, they buy dollars.”
Bitcoin safe haven: a false narrative?
Bitcoin is often touted as a hedge during currency crises. And to an extent, we have seen some evidence of this. When banks confiscated deposits in Cyprus, there was a noticeable spike in BTC prices. And some Venezuelans have found refuge in bitcoin during the recent hyperinflation crisis.
But the impact of a country’s currency crisis on bitcoin is not immediate. As Kruger explains, there was no dramatic flight to bitcoin in Argentina yesterday.
“Contrary to popular belief, bitcoin awareness in Argentina is extremely low (outside of the tech industry, where it is high), and the Argentine bitcoin market is accordingly small.”
Tiny bitcoin volume in Argentina
Former Bloomberg writer Camila Russo claimed bitcoin was “surging” in Argentina. She pointed to the BTC premium on Argentine crypto exchange Buenbit.
But the premium wasn’t driven by high demand. As Kruger explained, it’s just an illiquid exchange. Only 19 bitcoins were traded on Buenbit yesterday. It doesn’t take much to distort the premiums on such a small market.
This is the Buenbit $BTCARS orderbook. Only 19 BTC traded there today.
Other Argentine brokers don’t even have exchanges, offering only brokerage (either for retail or OTC).
Ripio used to have an exchange – it is now offline 🔥 pic.twitter.com/zoARKom5Gp
— Alex Krüger (@krugermacro) August 13, 2019
Kruger also dispelled the seemingly large volumes on Localbitcoins, where only 23 BTC were traded in the last week.
One could point at LocalBitcoins’ ever growing volumes. However, volume is only growing in ARS terms due to the depreciation of the peso. Volume has been dropping steadily and registered only 23 bitcoin in total last week. (would expect though a sharp increase this week) pic.twitter.com/OhRT2hHxWs
— Alex Krüger (@krugermacro) August 13, 2019
Everyone should still own bitcoin
Kruger maintained his long-term bullish stance on bitcoin and said Argentines should absolutely own some. The reality, however, is that BTC isn’t (yet) the safe haven of choice during this Argentine currency crisis.
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
