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Will cryptocurrency become a financial hedging tool for people in more countries with unstable currencies?
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Every time Türkiye experiences a major currency devaluation crisis, Bitcoin trading volume has mostly seen a significant increase. My view is positive
Argentina, with an inflation rate of 276% in 2024, has made Bitcoin an important tool to hedge against the depreciation of the peso. The country's cryptocurrency trading volume is expected to reach $91.1 billion between 2023 and 2024, surpassing Brazil to become one of the most active crypto markets in Latin America.
Venezuela: In 2024, the country's inflation rate is still as high as 60%. Although it is lower than the peak in 2018, the economic difficulties remain severe. The government's Petro cryptocurrency went bankrupt in 2024, but the trading volume of Bitcoin and stablecoins surged. In 2024, the use of cryptocurrencies as remittances surged, and 9% of Venezuela's annual remittances of US$5.4 billion were transferred in cryptocurrencies.
Bitcoin is considered digital gold due to its decentralization, fixed supply and anti-censorship characteristics, and is suitable for long-term value storage. Stablecoins, such as USDT and USDC, are more suitable for short-term transactions and risk aversion because they are pegged to the US dollar and provide price stability.
In countries with unstable currencies, BTC and stablecoins form a complementary system. Bitcoin is used to fight inflation in the long term, while stablecoins provide short-term liquidity needs. Although cryptocurrencies cannot solve the fundamental problems of the economy, they undoubtedly provide individuals with a realistic solution for value preservation and transactions during hyperinflation and exchange rate crises.
Yes, and it’s already happening. In countries with unstable currencies, high inflation, or capital controls, people are turning to crypto as a hedge against economic uncertainty. For example: Argentina & Turkey: People use stablecoins like USDT/USDC to escape inflation. Nigeria & Lebanon: Crypto is an alternative when banks restrict access to USD.
