Selloff in Hong Kong, Argentina causes premium on Bitcoin: Report
The selloffs in Argentina and Hong Kong has pushed local investors to pay premiums as high as 10 percent for Bitcoin, Bloomberg reports.
Currency devaluation and political uncertainty in the two regions have made Bitcoin a more attractive option despite its volatility, and possibly a way of protecting assets.
In Argentina, the leading cryptocurrency was recently trading for as much as $ 12,000 on peer-to-peer trading platform localBitcoins.com. This is a premium as high as 10 percent as against the price on other cryptocurrency exchanges.
The peso fell over 30 percent against the US Dollar (USD) on August 12 after opposition candidate Alberto Fernandez’s landslide win in the presidential primary election.
“In the last week alone, Bitcoin is up approximately 50 percent against the Argentine peso and trading at a significant premium on local exchanges. And they are not alone, joining the ranks of Venezuela, Hong Kong and Turkey who have also experienced similar shocks,” Rayne Steinberg, chief executive at crypto hedge fund Arca told Bloomberg.
Steinberg added that Bitcoin is becoming the “last resort” in regions hit by currency devaluation and political uncertainty.
There is an element of risk, given that Bitcoin is still volatile. The cryptocurrency plunged 73 percent in 2018, according to Bloomberg data.
Bitcoin slipped over 8 percent this week against the USD, the report said.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.