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Bitcoin hits new highs in Argentina, Turkey and Nigeria

31 Oct, 2023
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For some developing countries, inflation is an extremely acute economic problem that indicates a rise in the cost of goods and a drop in the population's purchasing power. The countries experiencing the highest inflation today are Venezuela (360%) and Zimbabwe (315%).

Image source: imf.org

Inflation is generally caused by short-sighted political decisions. In Turkey, the rise in prices was caused by President Recep Erdogan's refusal to tighten the country's monetary policy. The low key interest rate and high government spending caused the economy to overheat, leading to skyrocketing inflation from 20% in mid-2021 to 80% in mid-2022.

Inflation in Turkey, y/y (%)

As a result, Turkey faced a significant increase in the prices of imports, and even Bitcoin, which is still trading at a 50% discount from its all-time high, has set new highs against the Turkish lira.

Image source: StormGain cryptocurrency exchange

Turkey authorities are putting up all kinds of roadblocks in the way of cryptos penetration into the economy. In 2021, the country banned the exchange of lira for digital assets and vice versa. As such, despite Turks' strong interest in cryptos, the country has not become a new crypto hub.

Things are a bit better in Argentina, whose population is also suffering from high inflation and devaluation. Argentines try to exchange spare pesos for Bitcoin or stablecoins as soon as possible, which is why the country leads Latin America in crypto transactions with $85.4 billion a year.

Image source: chainalysis.com

One of the possible solutions to the economic crisis offered by politicians is the rejection of the national currency and the transition to settling financial transactions in US dollars. But El Salvador's president, Nayib Bukele, whose country has already travelled down this road, advises moving to Bitcoin instead of the dollar. Michael Saylor, head of MicroStrategy, the world's largest public holder of Bitcoin, shares a similar opinion.

Image source: twitter.com/saylor

Digital assets have a higher degree of penetration in countries with high inflation. In Argentina, for example, at least 11% of the total population uses crypto, while that figure stands at 4.2% globally.


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