Argentines bought between two and three times more stablecoins than on an average weekend following the resignation of Argentina’s Economy Minister Martin Guzmán on Saturday, the country’s cryptocurrency companies told CoinDesk.
Three major cryptocurrency exchanges said the high demand is related to investors seeking protection against a potential devaluation of the Argentine peso (ARS), whose purchasing power plummeted last year due to strong inflationary pressure.
Following Guzmán’s resignation, the peso has devalued around 15% against DAI and Tether (USDT) stablecoins on several major local platforms. Both stablecoins rose from ARS 245 on Friday (1) to ARS 280 over the weekend. (Following the appointment of Silvina Batakis to replace Guzmán as the new economy minister on Sunday, Argentine exchange quotes soared to ARS 303 per coin.)
“Whenever there is news like this in Argentina, the crypto market is the first to be triggered – in order to seek a price for the US dollar – due to the 24/7 nature of the cryptocurrency. This tends to increase volumes,” Sebastian Serrano, CEO of Ripio, an Argentine-based cryptocurrency exchange, told CoinDesk.
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Guzman’s resignation is part of the latest fallout from a row between Argentine President Alberto Fernández and Vice President Cristina Kirchner over the country’s economic direction, which saw inflation in May soar 60% year-on-year.
In addition, Argentina’s central bank is running out of foreign currency reserves, which makes imports difficult, among other consequences.
Increase in prices and spreads
Argentine crypto exchange Buenbit saw a 300% increase in trading on Sunday (3) from the same day in previous weeks, the company told CoinDesk, adding that “many people” used DAI as collateral to obtain loans in Argentine pesos and buy more DAI as protection against a possible devaluation of the peso.
Several local media reports did not rule out the possibility that the government could announce a currency holiday on Monday to calm markets. Due to the lack of price benchmarks for the US dollar over the weekend, most Argentine exchanges have increased the spreads between the bid and ask prices to 18%, when they are usually around 2%.
Pablo Sabbatella, founder of Latin America-focused crypto education platform DefyEducation, tweeted Sunday that “Exchanges added a giant spread so people don’t trade and they [as exchanges] protect yourself against tomorrow’s opening price.”
“Due to demand and without a benchmark replacement price, prices have risen and spreads have widened,” tweeted Andrés Vilella Weisz, head of trading and strategy at Argentina-based crypto exchange Lemon Cash, adding that following Guzmán’s resignation, demand for digital assets was strong.
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