Argentines bought between two and three times more stablecoins than an average weekend following the resignation of Argentina’s Economy Minister Martin Guzmán on Saturday, the country’s cryptocurrency firms told CoinDesk.
Three major cryptocurrency exchanges said the high demand is related to investors seeking protection from a potential devaluation of the Argentine peso (ARS), whose purchasing power has plummeted over the past year due to severe inflationary pressures.
Following Guzmán’s resignation, the peso has depreciated by around 15% against DAI and Tether (USDT) stablecoins on several major local platforms. Both stablecoins surged from ARS 245 on Friday (1) to ARS 280 over the weekend. (Argentine exchange rate quotes rose to ARS 303 per coin after the appointment of Silvina Batakis to succeed Guzmán as the new economy minister on Sunday.)
“Whenever there is news like this in Argentina, due to the 24/7 nature of cryptocurrency, the first thing that triggers the crypto market is to seek a price for the US dollar. This tends to increase volume,” Sebastian Serrano, CEO of Ripio, an Argentinabased cryptocurrency exchange, told CoinDesk.
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Guzman’s resignation comes as 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 surge 60% yearonyear in May.
In addition, the Argentine central bank is running out of foreign exchange reserves, which among other things makes imports more difficult.
Increase in prices and spreads
Argentinabased crypto exchange Buenbit saw trades surge 300% on Sunday (3) from the same day in previous weeks, the company told CoinDesk, adding that “many people” were using DAI as collateral to exchange loans in Argentina Receive pesos and buy more DAI than protection against a possible devaluation of the peso.
Several local media reports did not rule out 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 bourses have widened spreads between the bid and ask prices to 18% when they are normally around 2%.
Pablo Sabbatella, founder of Latin Americafocused crypto education platform DefyEducation, tweeted Sunday that “exchanges have added a huge spread so people don’t trade and they [as exchanges] protect yourself from tomorrow’s opening price.”
“Due to demand and without a benchmark surrogate price, prices have risen and spreads have widened,” tweeted Andrés Vilella Weisz, head of trading and strategy at Argentine crypto exchange Lemon Cash, adding that following Guzmán’s departure, demand for digital assets have risen sharply.
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