The investment that more and more Argentines are making to live in the "one to one" and earn 5% in dollars
The investment that more and more Argentines are making to live in the "one to one" and earn 5% in dollars
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While currencies like Bitcoin, Ethereum, XRP, and Solana, among others, show an upward trend, reaching historical records in many cases and some corrections, there is another less visible phenomenon with the "preferred" digital currency of Argentines.
Crypto dollar: growth at the global level
The so-called crypto dollar, which groups stablecoins that maintain a 1:1 convertibility with the greenback, is experiencing its moment of glory. Whether as a store of value, for international payments, or for profit-taking amid the rise of Bitcoin and other currencies. Or to arbitrage with other quotes and earn up to 5%.
As a demonstration of this, the global circulation in these currencies grew by 300% and climbed to a total of $200 billion, which amounts to:
The market value of giants like Shell or General Electric
Double that of Mercado Libre
10% of the total Bitcoin capitalization
Not to mention, the inflow of stable cryptocurrency capital into Binance reached a record $10.2 billion in November. Other platforms like OKX, Kraken, and Coinbase also saw an increase, with funds primarily used for spot trading, futures trading, and DeFi yield generation and Staking.
Tether (USDT) continues to lead this market with a market capitalization exceeding $130 billion. However, other stablecoins like Circle's USDC also recorded exponential growth, tripling their value in recent years.
While globally the exponential growth of stablecoins underscores their importance in the digital economy, in the country it awakens other motivations. Accustomed to the ups and downs of dollar quotes that have coexisted for many years, Argentines seek to somehow bypass the restrictions.
Keys to crypto dollars in Argentina
Keys to crypto dollars in Argentina
"More than 60% of the purchases made in the first half were of stablecoins like USDC and USDT, which is well above the regional average in Latin America (36%)," says Julián Colombo, General Director of Bitso Argentina, to iProUP.
The reference also comments that stablecoins occupy second place in the wallets of Argentine users, with 22% of holdings, only behind Bitcoin: "This demonstrates a strong preference for these digital currencies as a way to safeguard value."
"It's a behavior that responds to the particularities of the local economic context, something that motivates users to seek safe and quick alternatives to protect their money," adds Colombo.
These assets play a crucial role in facilitating transactions, providing liquidity and stability in a volatile market. According to Chainalysis, the "cushion" of digital currencies of Argentines reaches $91 billion, of which $20 billion would correspond to crypto dollars.
Regarding what is happening in the current context of green boards in the crypto world, Colombo highlights: "When there is an increase in Bitcoin transactions, stablecoin transactions also rise because they are the gateway to other cryptocurrencies."
In this sense, it reveals another use that local savers give to crypto dollars: "Argentines use pesos to buy stablecoins, with that they maintain their stable portfolio and from there jump from stablecoins to #Bitcoin! or other cryptocurrencies."
Crypto dollar: its importance
The cryptocurrency market reaches a capitalization of $3.33 trillion. Within this constantly expanding ecosystem, stablecoins are a fundamental component, representing between 5.7% and 6.2% of the total market value, according to data published by Coingecko.
"They already exceed $200 billion, when four years ago they had a market capitalization of only $47 billion," says analyst Rodrigo Mansilla.
According to data from Coingecko, this represents an increase of over 319%. Although Defillama, which excludes certain assets backed by gold, presents a slightly lower figure, both platforms agree on the upward trend of this type of digital currency.
Data from this report shows a growth of 186% since April 2021, reaching a valuation of almost $190 billion. Tether (USDT) consolidates as the undisputed leader, with a capitalization exceeding $130 billion.
"The supply of these assets has also grown significantly with the emergence of options that offer attractive yields. Stablecoins like USDS and USDE, which generate interest, have gained some ground and positioned themselves among the top five," adds Mansilla.
Another one is Lift Dollar (USDL), issued by Paxos and backed by US Treasury bonds, which automatically yields around 5% annually without the user needing to invest in that digital currency. The country chosen for its global debut was Argentina.
The expert sees an upward trend for the medium and long term, as "they also decisively contribute to the development of decentralized finance (DeFi), enabling the creation of new innovative financial products and services.