In 2021, El Salvador became the first country in the world to accept Bitcoin as legal tender, which caused a great sensation around the world and set an example for Latin America to dare to innovate. This decision by El Salvador not only changed the country's financial system, but also promoted the interest in cryptocurrencies throughout Latin America, showing the region's openness to new technologies.
Aiying summarizes the "LATAM Market Report" released by Kaiko to show you the current status, main trends and future prospects of the cryptocurrency market in Latin America in 2024. We will look at the market conditions in each country, which coins people like to trade, and the development of local exchanges. Through these contents, you will find Latin America's unique position and development potential in the global cryptocurrency market. Whether it is because of the 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
Political instability, inflation, and a large unbanked population are plaguing many countries in Latin America, and for these reasons, more and more people are beginning to pay attention to and adopt cryptocurrencies.
First, political instability is a long-standing problem in Latin America. From frequent regime changes to various policy changes, the financial systems of many countries lack stability. For example, in countries such as Argentina and Venezuela, political turmoil has led to serious economic problems, causing the devaluation of traditional currencies. For ordinary people, cryptocurrencies have become a safe haven tool. They can protect their property from the devaluation of their own currencies by holding cryptocurrencies such as Bitcoin.
Secondly, inflation is very serious in some Latin American countries. Take Argentina as an example, its inflation rate exceeded 200% in 2024. Such high inflation forces people to find new ways to preserve wealth. Cryptocurrency has become a good choice because of its decentralized and anti-inflation characteristics. Many people convert part of their assets into Bitcoin or stablecoins to fight the rapid depreciation of their national currencies.
Finally, the large number of unbanked populations is also an important reason why cryptocurrencies are popular in Latin America. 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 for 2024
Looking ahead to 2024, Latin America’s cryptocurrency market is expected to experience significant growth. This is mainly due to the following 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 suit. For example, Argentina established a registration system for cryptocurrency exchanges in 2023. These measures provide legal protection for the development of the cryptocurrency market.
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 market adoption.
Major exchanges are also constantly optimizing technology, improving transaction efficiency and security, and enhancing user trust.
Economic environment driving:
The problems of high inflation and currency depreciation remain serious, 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 becoming part of people's lives.
Market education and user awareness enhancement:
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 a 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:
Establishing Chivo, a national digital wallet:
The government developed a digital wallet called "Chivo" that 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 has partnered with nonprofit organizations to carry out cryptocurrency-related education and training programs to help citizens understand how to use Bitcoin and its potential risks.
This series of measures has made El Salvador occupy a unique position in the global cryptocurrency market and become an object of study and reference for other countries. Although this policy also faces some challenges in its implementation, such as technical problems and resistance from some people, the legalization of Bitcoin in El Salvador has undoubtedly explored new possibilities for the application of cryptocurrency.
2. Brazil’s Leading Position
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.
The 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.
The 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
In Latin America, cryptocurrency trading volume has shown a significant growth trend. Market performance varies from country to country, but overall it shows strong development momentum. The following is an analysis of each country's transaction volume and market share, highlighting Brazil's dominant position.
Brazil's Dominance:
Brazil dominates the Latin American cryptocurrency market, with its trading volume growing significantly in 2024. According to statistics, Brazil’s cryptocurrency trading volume reached $6.9 billion between January and May 2024, accounting for 53% of the Latin American market. This growth is driven by Brazil’s crypto-friendly policy environment and strong domestic demand for mainstream cryptocurrencies such as Bitcoin and Ethereum.
Brazil’s market share far exceeds that of other countries, and although countries such as Mexico and Argentina are also increasing their trading volumes, their market share is relatively small. This dominance of Brazil is not only reflected in trading volume, but also in the activity of exchanges and the number of users.
Mexico's market share:
Mexico is the second largest cryptocurrency market in Latin America, with trading volume concentrated on local exchange Bitso. Bitso holds 99.5% of the Mexican market, while international exchanges such as Binance and Bitfinex have relatively small market shares. Despite the increase in trading volume, Mexico's overall market share is still lower than Brazil.
Argentina's market share:
Argentina’s cryptocurrency market has also shown significant growth in 2024, driven in particular by high inflation and currency depreciation. Argentina's trading volume increased by more than 400% between January and May 2024, but its market share remains lower than that of Brazil and Mexico due to the smaller overall market size.
2. Inflation and currency depreciation
Inflation and currency depreciation are important factors driving the increase in cryptocurrency trading volume in Latin America, especially in countries such as Argentina.
Argentina’s high inflation:
Argentina's inflation rate exceeded 200% in 2024, and the currency continued to depreciate, leading to a surge in demand for cryptocurrencies among local residents. Bitcoin and stablecoins such as USDT have become the main tools for Argentines to fight inflation and protect their property. Against this backdrop, Argentina's Bitcoin trading volume has increased several times in a short period of time, especially on the local exchange Bitso and the international exchange Binance.
Due to the dual pressures of inflation and currency depreciation, Argentines are increasingly inclined to convert part of their assets into cryptocurrencies to preserve their value. This trend became particularly evident in 2024, leading to a significant increase in trading volume.
Other countries:
The situation is similar in Venezuela, where high inflation and economic crisis have made Bitcoin and other cryptocurrencies important safe havens. Although Venezuela’s market size is relatively small, its cryptocurrency trading volume growth has been equally significant.
Countries such as Colombia and Peru have been similarly affected, as while inflation rates in these countries are relatively low, economic uncertainty and political unrest have prompted more people to turn to cryptocurrencies.
The role of stablecoins:
Stablecoins play an important 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.
Overall, Latin American countries show different characteristics in terms of cryptocurrency trading volume and market share. Brazil has taken a dominant position with its friendly policy environment and strong market demand, while Argentina and other countries have promoted the widespread adoption of cryptocurrencies due to high inflation and currency depreciation pressure. 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.
4. Trading Preferences and Major 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.
Stablecoin dominance:
Stable value: Unlike volatile cryptocurrencies such as Bitcoin and Ethereum, stablecoins are usually pegged to stable currencies such as the US 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.
Transaction convenience: Stablecoins can 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.
scenes to be used:
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.
Cross-border remittances: Since stablecoins can be transferred quickly and at low cost around the world, many Latin American immigrants working abroad choose to remit remittances back home via stablecoins, avoiding the high fees and exchange rate losses of traditional remittance methods.
market data:
In Latin American cryptocurrency exchanges, stablecoin trading accounts for a large proportion. Taking Brazil as an example, nearly half of BRL (Brazilian Real) trading pairs in 2024 involve stablecoins. Overall, more than 40% of Latin American cryptocurrency transactions are related to USDT, indicating the important position of stablecoins in the market.
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.
Competitive advantage: Local exchanges have won the favor of users by providing services that are more in line with local needs, low transaction fees and better customer support. At the same time, facing Binance’s regulatory dilemma, local exchanges have seized the opportunity to further expand their market share.
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. Aiying will also continue to pay attention.
References:
LATAM Market Report, Kaiko, June 2024.
Kaiko official website, research.kaiko.com
Official website of the Central Bank of Brazil, www.bcb.gov.br
Official website of the Government of El Salvador, www.presidencia.gob.sv
Bitso exchange official website, www.bitso.com
Official website of MercadoBitcoin exchange, www.mercadobitcoin.com.br
Binance exchange official website, www.binance.com
“El Salvador adopts Bitcoin as legal tender”，BBC News，www.bbc.com
“Brazil’s Crypto Regulation: A Legal Framework for the Future”，CoinDesk，www.coindesk.com
“Argentina's Inflation Crisis and Cryptocurrency Adoption”，Forbes，www.forbes.com
