November 8, 2024

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Why has Bitcoin price hit new all-time highs in Turkey, Egypt, Nigeria and Argentina?

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11 months ago admin
Why has Bitcoin price hit new all-time highs in Turkey, Egypt, Nigeria and Argentina?

Since bottoming around $16,800, Bitcoin (BTC) has displayed resilience throughout 2023, posting over 153% gains year-to-date and 143% over the last 12 months to outperform major tech companies.

BTC/USD Daily Chart. Source: TradingView

Despite this impressive performance, the flagship cryptocurrency’s price is still 39% below the all-time high (ATH) level against the U.S. dollar reached in November 2021.

Meanwhile, Bitcoin continues to hit new ATHs in Argentina, Turkey, Egypt, Nigeria, Lebanon and Pakistan.

According to the Dec. 13 post, at one point on Dec. 12, the price of 1 BTC reached ATHs against the Argentine peso at 15,176,100.12 pesos. BTC was worth 1,202,109.40 Turkish liras, 32,703,517.06 Nigerian nairas and 1,280,955.47 Egyptian pounds.

The chart also showed that BTC has reached ATHs against the Lebanese pound and the Pakistani rupee at 622,548,74.67 Lebanese pounds and 11,736,063.26 Pakistani rupees, respectively.

It is worth mentioning that these figures are equivalent to the current price of Bitcoin and that the meteoric rise of the cryptocurrency in these countries is due to high inflationary pressures, resulting in the devaluation of their respective currencies.

Data from the International Monetary Fund (IMF) ranks countries’ annual percentage change in inflation rates and end-of-period consumer prices.

Inflation rates per ountry. Source: IMF

According to the chart above, the Zimbabwean dollar currently has the highest annual inflation rate at 396%, followed by the Venezuelan bolivar (250%), Sudanese pound (238%) and the Argentine peso (135%).

The Turkish lira and Nigerian naira came in fifth and 12th with annual inflation rates of 64% and 30%, respectively, IMF’s data shows.

For most crypto investors in these countries, Bitcoin has become a reliable store of value and a hedge against rocketing inflation.

Many of these countries, including Nigeria and Argentina, have been readily adopting cryptocurrencies despite the steady devaluation of their currency.

Nigeria, Turkey and Argentina boast the second, 12th and 15th highest rates of cryptocurrency adoption worldwide, according to a Sept. 12 report by Chainalysis.

Argentina’s Bitcoin adoption is likely to get a boost following the outcome of the Nov. 19 presidential election run-off, which saw pro-Bitcoin candidate Javier Milei emerge the winner.

After assuming office on Dec. 10, Milei appointed Luis Caputo as economy minister, who announced on Dec. 12 that Argentina was devaluing the peso over 50% to 800 per U.S. dollar in an “emergency package” aimed at balancing the budget by 2024. This move appears to have been endorsed by the IMF.

The IMF called the measures “bold,” adding that they would “significantly improve public finances in a way that protects the most vulnerable in the society and strengthen the exchange rate regime.”

While on the campaign trail, Milei said he would abolish Argentina’s central bank if he took over as president.

Related: Bitcoin derivatives data points to traders’ $50K BTC price target

Bitcoin outperforms tech companies

During the extended 2022 bear market, Bitcoin fell relentlessly in tandem with tech stocks. According to a review letter by Pantera Capital — an American crypto hedge fund — Bitcoin has outperformed all of them except for Meta, which has recorded YTD gains of more than 172% against BTC’s 162%.

Bitcoin bounced back in 2023 due to a “vast majority of significant events” that were “good news,” with the “blockchain industry making meaningful, necessary progress,” according to Pantera.

The crypto hedge firm lists a number of these events, including increased institutional adoption courtesy of “spot Bitcoin ETFs sponsored by large names in traditional finance – like BlackRock and Fidelity – and the leader in blockchain ETFs, Bitwise.” The potential approval of Bitcoin exchange-traded funds opens a new channel for traditional capital to be injected into Bitcoin as “digital gold.”

The letter also notes that the ability of the market to rely on the U.S. court system to be fair has been “reassuring,” citing the ruling by Judge Analisa Torres that XRP (XRP) is not a security and Grayscale’s win in its lawsuit against the Securities and Exchange Commission regarding its BTC ETF application. These point to a favorable regulatory landscape for crypto in the U.S., enabling further innovation to occur onshore, the report noted.

In addition to these, the upcoming Bitcoin halving event in 2024 is also contributing to the widespread optimism surrounding the flagship cryptocurrency.