In 2021, El Salvador became the first country in the world to list Bitcoin as legal tender. This bold decision not only caused a huge sensation worldwide, but also set an example of innovation in Latin America. El Salvador's decision not only changed the country's financial system, but also stimulated interest in cryptocurrencies throughout Latin America, demonstrating the region's openness to new technologies.
This article will take you through the current status, main trends and future prospects of the Latin American cryptocurrency market in 2024 by sorting out and summarizing the "LATAM Market Report" released by Kaiko. We will explore the market conditions of various countries, popular trading currencies, and the development of local exchanges. You will find that Latin America has a unique position and development potential in the global cryptocurrency market. Whether it is due to political environment, economic pressure, or technological innovation, Latin America is promoting the widespread use of cryptocurrency in its own way.
1. Latin American Market Overview
1. Market background
Latin America has long been plagued by political instability, inflation and a large unbanked population, issues that have prompted growing interest in and adoption of cryptocurrencies.
Political instability: The financial systems of many Latin American countries lack stability due to frequent regime changes and policy changes. For example, political turmoil in Argentina and Venezuela has led to serious economic problems, causing the devaluation of traditional currencies. Ordinary people regard cryptocurrencies as a hedge tool and protect their property from the devaluation of their own currencies by holding cryptocurrencies such as Bitcoin.
Inflation: Some countries have very high inflation rates. Take Argentina, for example, where the inflation rate exceeded 200% in 2024. High inflation forces people to find new ways to preserve wealth, and cryptocurrency has become a good choice due to its decentralized and anti-inflation properties. Many people convert part of their assets into Bitcoin or stablecoins to counter the rapid depreciation of their national currencies.
Unbanked population: Many people cannot use traditional banking services for various reasons, but as long as they have a smartphone, they can trade and save through cryptocurrencies. This not only facilitates the circulation of funds, but also provides these people with more opportunities for economic participation.
2. Market growth forecast in 2024
Looking ahead to 2024, the cryptocurrency market in Latin America is expected to grow significantly, driven by several factors:
Policy support and regulatory improvement: Governments around the world have begun to realize the potential of cryptocurrencies and have introduced supportive policies. For example, Brazil launched its central bank digital currency (CBDC) in 2021 and gradually improved relevant regulations to make the market environment more friendly and standardized. Other countries are also actively following up. For example, Argentina established a registration system for cryptocurrency exchanges in 2023 to provide legal protection for market development.
Technological innovation and infrastructure construction: Latin American technology companies and financial institutions continue to launch new cryptocurrency products and services, attracting a large number of users. For example, Brazil's Itau Unibanco launched trading and custody services for Bitcoin and Ethereum, further promoting the popularity of the market. Major exchanges are also constantly optimizing technology, improving transaction efficiency and security, and enhancing user trust.
Driven by the economic environment: The problems of high inflation and currency depreciation remain severe, and people's demand for cryptocurrencies continues to grow. Especially in countries such as Argentina and Venezuela, more and more people regard cryptocurrencies as an effective tool to fight inflation and protect their property. At the same time, with the digital transformation of the economy, the use scenarios of cryptocurrencies are also expanding. From cross-border payments to daily consumption, cryptocurrencies are gradually integrating into people's lives.
Market education and user awareness: As time goes by, more and more people begin to understand and recognize the value of cryptocurrencies. The increase in various education and publicity activities has led to a continuous increase in the acceptance and use of cryptocurrencies by ordinary people.
Overall, Latin America has good conditions for the rapid growth of the cryptocurrency market. Policy support, technological progress, economic environment needs and user awareness are all important factors driving market development. It is expected that in 2024, the cryptocurrency market in Latin America will usher in a new round of rapid development, showing great potential.
2. Latin American Market Highlights
1. Bitcoin legalization in El Salvador
El Salvador made history in 2021 by becoming the first country in the world to adopt Bitcoin as legal tender. This bold move not only attracted the attention of the global media, but also caused widespread discussion in the international financial community.
El Salvador's legalization of Bitcoin began with a proposal by President Nayib Bukele to promote economic development and financial inclusion. Bukele believes that Bitcoin can help the large number of Salvadorans who do not have bank accounts enter the financial system while attracting investment and tourism from the global Bitcoin community.
To support this policy, the Salvadoran government has introduced a series of supporting measures:
Establishment of the national digital wallet Chivo: The government developed a digital wallet called "Chivo" which is available to all citizens and gives away $30 worth of Bitcoin to each new user to encourage usage and popularity.
Building Bitcoin infrastructure: El Salvador has installed Bitcoin ATMs across the country to facilitate people's deposit, withdrawal and transaction of Bitcoin.
Promote education and training: The government works with nonprofit organizations to carry out cryptocurrency-related education and training programs to help citizens understand how to use Bitcoin and the potential risks.
Although this policy faces some challenges in its implementation, such as technical issues and resistance from some people, the legalization of Bitcoin in El Salvador has undoubtedly explored new possibilities for the application of cryptocurrencies.
2. Brazil’s leadership
As Latin America’s largest economy, Brazil is also at the forefront of cryptocurrency. Brazil has not only made positive attempts in policy and regulation, but has also made significant progress in technological and market innovation.
Launch of CBDC: The Central Bank of Brazil announced the launch of a research and development project for a central bank digital currency (CBDC) in 2021. Through CBDC, Brazil hopes to improve the efficiency of the financial system, reduce transaction costs, and promote financial inclusion. Currently, Brazil's CBDC project has entered the testing phase and is expected to be fully promoted in the next few years.
Launch of cryptocurrency ETFs: In 2021, Brazil launched Latin America's first Bitcoin ETF and Ethereum ETF. These ETFs are listed and traded on the Brazilian Stock Exchange (B3), providing investors with a convenient channel for cryptocurrency investment. The launch of ETFs has not only attracted the attention of a large number of local investors, but also driven the inflow of international capital.
Improvement of market supervision and legal framework: Brazil passed the Cryptoassets Act in 2021, which provides a clear legal basis and regulatory framework for the cryptocurrency market. This legal framework covers the trading, custody, and issuance of cryptocurrencies, aiming to protect the interests of investors and combat money laundering and other illegal activities.
Participation of local financial institutions: Brazil’s large financial institutions, such as Itau Unibanco and Banco Bradesco, are actively involved in the cryptocurrency market. Itau Unibanco launched trading and custody services for Bitcoin and Ethereum in 2024, further promoting the popularity and development of the market.
Through these measures, Brazil has established a leading position in the Latin American cryptocurrency market, attracting not only a large number of local users but also the attention of global investors. Brazil's experience shows that policy support, market innovation and technological progress are key factors in promoting the development of the cryptocurrency market.
3. Trading Activities and Market Trends
1. Trading volume and market share
Cryptocurrency trading volumes in Latin America have grown significantly, with market performance varying across countries, but overall showing strong momentum. The following is an analysis of each country's transaction volume and market share, highlighting Brazil's dominant position.
Brazil’s dominance
Brazil occupies an absolutely dominant position in the Latin American cryptocurrency market, with trading volume reaching $6.9 billion in the first half of 2024 (January to May), accounting for 53% of the entire Latin American market. Behind this significant growth is the Brazilian government’s cryptocurrency-friendly policies and strong domestic demand for mainstream cryptocurrencies such as Bitcoin and Ethereum.
Mexico's market share
Mexico is the second largest cryptocurrency market in Latin America, with trading activity concentrated on the local exchange Bitso. Bitso has a 99.5% market share in Mexico, while international exchanges like Binance and Bitfinex have a relatively small market share. Although Mexico's trading volume has increased, its overall market share is still lower than that of Brazil.
Argentina’s market share
Argentina’s cryptocurrency market has also shown significant growth in 2024, driven primarily by high inflation and currency depreciation. In the first half of 2024, Argentina’s transaction volume increased by more than 400%. However, its market size is still small and its market share is still lower than that of Brazil and Mexico.
Inflation and currency devaluation
Inflation and currency devaluation in Latin America, especially Argentina, have driven a significant increase in cryptocurrency trading volumes.
High inflation in Argentina
In 2024, Argentina's inflation rate exceeded 200%, causing the currency to depreciate rapidly. This economic turmoil has caused local residents to turn to cryptocurrencies to protect their wealth. Bitcoin and stablecoins (such as USDT) have become the main tools for Argentines to fight inflation and protect their property.
Against this backdrop, Bitcoin trading volume in Argentina has surged several times in a short period of time. Trading activities on local exchange Bitso and international exchange Binance are particularly active, reflecting people's urgent demand for cryptocurrencies.
Inflation and currency devaluation: Argentines' safe haven
Faced with the dual pressures of inflation and currency depreciation, more and more Argentines are beginning to convert part of their assets into cryptocurrencies to preserve their value. This trend is particularly evident in 2024, leading to a significant increase in cryptocurrency trading volume.
The situation in other countries
Venezuela: High inflation and economic crisis have made Bitcoin and other cryptocurrencies important safe havens. Despite the market’s relatively small size, its cryptocurrency trading volume growth has been equally significant.
Colombia and Peru: While inflation rates in these countries are relatively low, economic uncertainty and political unrest have prompted more people to turn to cryptocurrencies for stability and a means of preserving value.
The role of stablecoins
Stablecoins play a key role in combating inflation and currency devaluation. Because their value is pegged to stable currencies such as the U.S. dollar, stablecoins provide users with a stable store of value. In Latin America, stablecoins such as USDT have seen a significant increase in their use in transactions, becoming the primary tool for trading against local currencies.
Cryptocurrency market performance in Latin America
Overall, Latin American countries show different characteristics in terms of cryptocurrency trading volume and market share. Brazil has taken a leading position with its friendly policy environment and strong market demand, while Argentina and other countries have promoted the widespread adoption of cryptocurrencies under the pressure of high inflation and currency depreciation. In the future, with further changes in the economic and policy environment, the Latin American cryptocurrency market is expected to continue to grow and show a more diversified development trend.
Trading Preferences and Primary Exchanges
1. Popularity of Stablecoins
In Latin America, stablecoins have been widely welcomed due to their relatively stable value and easy convertibility, becoming an important choice for many investors and ordinary users.
In Latin America, stablecoins are quickly becoming the preferred choice of residents in the cryptocurrency market. Their unique advantages make them particularly popular in economically turbulent regions.
Stable value
Unlike volatile cryptocurrencies such as Bitcoin and Ethereum, stablecoins are usually pegged to stable currencies such as the U.S. dollar and can provide a relatively stable store of value. For Latin American residents facing high inflation and currency depreciation pressure, stablecoins are a reliable option.
Trading convenience
Stablecoins are not only used for storing value, but can also be conveniently used for daily transactions and cross-border payments. Many Latin American users use stablecoins such as USDT for savings, transfers and payments, which greatly improves the convenience and efficiency of financial transactions.
Diversified use cases of stablecoins
Daily consumption and savings
In countries with severe inflation, such as Argentina and Venezuela, residents are increasingly using stablecoins for daily consumption and savings to hedge against the risk of depreciation of their own currencies. Stablecoins provide them with a safe and stable way to protect their wealth.
Cross-border remittance
Since stablecoins can be transferred quickly and at low cost around the world, many Latin American immigrants working abroad choose to remit money back home through stablecoins. This not only avoids the high fees of traditional remittance methods, but also avoids exchange rate losses.
Market data: The rise of stablecoins
Stablecoins account for a large amount of trading volume on cryptocurrency exchanges in Latin America. Here are some key data:
Brazil: Nearly half of BRL (Brazilian Real) trading pairs will involve stablecoins in 2024. This reflects the high dependence of residents on stablecoins.
Overall market: More than 40% of Latin American cryptocurrency transactions are related to USDT, which fully demonstrates the important position of stablecoins in the market.
Stablecoins are changing the financial landscape in Latin America. As economic and political uncertainty continues to affect the region, the use and importance of stablecoins will only increase. Whether it is daily consumption, savings, or cross-border remittances, stablecoins provide Latin American residents with a stable and efficient financial path.
2. The rise of local exchanges
Although Binance is the largest cryptocurrency exchange globally, in Latin America, local exchanges such as Bitso and MercadoBitcoin are gradually emerging, challenging Binance's market share.
Challenges facing Binance:
Legal and Regulatory Issues: Binance faces legal and regulatory challenges in several countries around the world, including the United States, Nigeria, and the Philippines. In Latin America, Binance also faces legal issues for alleged violations of local regulations. In 2023, Brazil's congressional committee recommended prosecuting Binance's founder Changpeng Zhao and three of its Brazilian executives, which affected Binance's market position in Brazil.
Insufficient localized services: Although Binance provides a wide range of cryptocurrency trading services worldwide, it still lacks localized services, especially for the needs of Latin American users. Local exchanges are able to provide services and support that are closer to user needs, attracting a large number of users.
The rise of local exchanges:
Bitso: As the largest cryptocurrency exchange in Mexico, Bitso occupies an important position in the Latin American market. In 2024, Bitso's market share in Mexico reached 99.5%, almost monopolizing local cryptocurrency transactions. Bitso has attracted a large number of users by providing localized payment solutions and low transaction fees.
MercadoBitcoin: Brazil’s MercadoBitcoin also experienced significant growth in 2024, with its trading volume doubling in a year. This growth was aided by its payment institution license from the Central Bank of Brazil, which improved its regulatory compliance and user trust. Additionally, MercadoBitcoin continues to expand its cryptocurrency product line, attracting more investors and traders.
Trading pair analysis:
Binance, HTX, and KuCoin: Stablecoins are the most traded crypto assets on these international exchanges. This suggests that, although these platforms offer a variety of cryptocurrencies for trading, users prefer to trade in stablecoins, primarily due to their stable value characteristics.
Bitso: The trading volume of XRP is the highest on the Bitso exchange in Mexico. This trend is mainly due to the close cooperation between Bitso and Ripple (the issuer of XRP), which has attracted a large number of XRP transactions.
MercadoBitcoin: As the only local exchange with the highest Bitcoin trading volume in Latin America, MercadoBitcoin is more in line with global trading trends. As the world's most well-known cryptocurrency, Bitcoin's trading volume on MercadoBitcoin shows that Brazilian users have a high degree of recognition and demand for Bitcoin.
Market share and competition landscape:
Market share: Although Binance has a large market share globally, its market share in Latin America is constantly being eroded by local exchanges. In 2024, Binance's share of the Latin American market fell to 49.69%, while Bitso and MercadoBitcoin accounted for 40.68% and 9.24% of the market share respectively.
In summary, stablecoins dominate the Latin American market and have become an important tool to combat inflation and currency depreciation. At the same time, local exchanges such as Bitso and MercadoBitcoin have gradually emerged with their localization advantages and flexible service models, challenging Binance's market dominance. In the future, with the intensification of market competition and the continuous changes in user needs, the cryptocurrency market in Latin America will present a more diversified and vibrant development trend.
5. In-depth analysis of various countries’ markets
1. Brazilian market
Brazil is Latin America’s largest economy and its cryptocurrency market has also shown strong growth. In 2024, Brazil’s cryptocurrency market will exhibit the following notable features:
Market Growth:
Cryptocurrency trading volume in Brazil grew significantly in 2024, reaching $6.9 billion between January and May, nearly doubling from the same period in 2023. This growth was mainly driven by increased trading volumes in mainstream cryptocurrencies such as Bitcoin and Ethereum.
Brazil's cryptocurrency market not only performs well in terms of trading volume, but also leads in terms of the number of users and market activity. More and more Brazilians are beginning to accept and use cryptocurrencies for investment and payment.
The rise of local platforms:
MercadoBitcoin: MercadoBitcoin is Brazil’s largest local cryptocurrency exchange and its market share will increase significantly in 2024. MercadoBitcoin offers a variety of cryptocurrency trading pairs and continues to improve in terms of user experience and security. In 2024, MercadoBitcoin’s trading volume doubled, mainly due to its payment institution license with the Brazilian Central Bank and its expanding cryptocurrency product line.
Localization advantage: Local exchanges have won the trust and support of a large number of users by providing services that are more in line with the needs of Brazilian users, such as local payment methods, low transaction fees, and 24-hour customer support.
Policy and regulatory environment:
The Brazilian government has an open attitude towards cryptocurrencies and actively promotes relevant legal and regulatory frameworks. The "Legal Framework for Crypto Assets" passed in 2021 provides a clear legal basis for the cryptocurrency market and promotes the healthy development of the market.
The Central Bank of Brazil is also actively exploring and promoting central bank digital currency (CBDC), hoping to improve the efficiency and inclusiveness of the financial system through CBDC.
Participation of traditional financial institutions:
Brazil's large financial institutions, such as Itau Unibanco and Banco Bradesco, have actively participated in the cryptocurrency market and launched trading and custody services for Bitcoin and Ethereum. The participation of these traditional financial institutions has not only increased the depth and breadth of the market, but also enhanced users' trust in cryptocurrencies.
Mexico and Argentina Market
Mexico and Argentina are two other important countries in the Latin American cryptocurrency market, and their market conditions are unique.
2. Mexico market:
Exchange dominance: Mexico's cryptocurrency market is dominated by local exchange Bitso. Bitso has a 99.5% market share in the Mexican market and is the most popular cryptocurrency trading platform in the country. Bitso has attracted a large number of users by providing localized payment solutions and low transaction fees.
Market growth: Mexico's cryptocurrency trading volume will grow steadily in 2024, but it will still be lower than Brazil's trading volume. Mexican users are mainly concentrated in the trading of mainstream cryptocurrencies such as USDT and Bitcoin.
Policy and regulation: The Mexican government has gradually improved its regulation of cryptocurrencies, and in 2023 passed a law requiring all cryptocurrency exchanges to register. This move will help regulate the market and protect the interests of investors.
3. Argentina market:
Driven by high inflation: Argentina's cryptocurrency market growth is mainly driven by high inflation and currency depreciation. In 2024, Argentina's inflation rate exceeded 200%, causing a large number of residents to convert part of their assets into cryptocurrencies to counter the depreciation of their national currency.
Trading volume and market share: Argentina’s cryptocurrency trading volume has grown significantly in 2024, increasing by more than 400% between January and May. Argentine users are mainly concentrated in trading Bitcoin and stablecoins such as USDT.
Role of local exchanges: While Binance and other international exchanges have a presence in the Argentine market, local exchange Bitso is also gradually expanding its influence, especially in Bitcoin and stablecoin trading in Argentina.
In general, Brazil, Mexico, and Argentina each have their own characteristics in the Latin American cryptocurrency market. Brazil is in the lead with its strong market growth and the rise of local platforms; Mexico is developing steadily through the dominance of local exchange Bitso; and Argentina's cryptocurrency market is expanding rapidly driven by high inflation and currency depreciation. In the future, as the policies and market environment of various countries are further improved, these markets are expected to continue to grow and show greater development potential.
VI. Future Outlook
Based on the above analysis, Aiying believes that the Latin American cryptocurrency market will usher in more significant development in the next few years:
The market size will continue to expand:
With policy support and technological advancement, the size of the Latin American cryptocurrency market is expected to continue to expand in the next few years. Countries such as Brazil, Mexico and Argentina will continue to play an important role in driving market growth across the region.
Stablecoin and Bitcoin dominance will continue:
Stablecoins will continue to play an important role in transactions, especially in countries with high inflation. At the same time, Bitcoin's position as a store of value and investment tool will become more solid, attracting more users and investors.
The competitive advantages of local exchanges will be enhanced:
Local exchanges such as Bitso and MercadoBitcoin will further consolidate their market position and continue to attract and retain users with localized services and flexible operating strategies. At the same time, international exchanges such as Binance need to pay more attention to local market needs to cope with competitive pressure.
Financial inclusion will increase:
The popularity of cryptocurrencies will significantly increase financial inclusion in Latin America, especially for the unbanked. Through cryptocurrency, these people will be able to participate in economic activities more conveniently and improve their economic status.
Overall, the Latin American cryptocurrency market will show strong growth momentum and broad development prospects in the next few years. Whether it is the improvement of the policy environment or the drive of technological innovation, Latin America is expected to become an important part of the global cryptocurrency market, showing great potential and vitality.
