Argentina’s citizens purchased 2-3 times as many stablecoins over the course of a typical weekend.
Economy minister Martin Guzmán resigned on Saturday amid high inflation.
Leading cryptocurrency exchanges noted that users were looking for an inflation hedge in their comments.
This year, the purchasing power of the local currency (peso, ARS) has drastically decreased.
Due to the resignation of Argentina’s economy minister Martin Guzmán this Saturday, two to three times as many stablecoins were bought in Argentina than on an average weekend.
Customers wanted to protect themselves against a prospective devaluation of the Argentine peso (ARS), whose purchasing power has dropped sharply over the past year as inflation has soared, according to three major cryptocurrency exchanges.
Following Guzmán’s resignation, the ARS lost about 15% of its value against the stablecoins DAI and tether on a number of well-known local exchange platforms.
Both stablecoins increased in value over the weekend, from ARS 245 on Friday to ARS 280. (Tether quotations on Argentine exchanges increased to ARS 303 per coin having followed the late Sunday appointment of Silvina Batakis to succeed Guzman as the new minister of economy.)
The first market Argentina looks for a price for the U.S. dollar whenever one of these news stories breaks in Argentina is cryptocurrency due to the 24/7 nature of the industry. This raises volumes, according to Sebastian Serrano, CEO of Ripio, an Argentinean cryptocurrency exchange, in a statement.
In order to obtain loans in Argentine pesos and buy more DAI as insurance against a potential peso devaluation, “many people,” according to Buenbit, used their DAI as collateral.
Particularly in comparison to the same day in previous weeks, trading on the exchange increased by 300 percent on Sunday.
Guzmán’s resignation is the latest repercussion of a dispute between Argentine President Alberto Fernandez and Vice President Cristina Fernández de Kirchner over the country’s economic course, which led to a 60% increase in inflation in May over the same month last year.
Additionally, the central bank of Argentina is running low on foreign exchange reserves, which has a negative impact on imports among other things.
“Prices rose and spreads widened due to demand and the lack of a reference replacement price,” Andrés Vilella Weisz, the head of trading and strategy at the Argentine cryptocurrency exchange Lemon Cash, tweeted.
Ayer tras la renuncia de Guzmán apareció fuerte demanda de dólares cripto. Debido a la demanda y sin precio de reposición de referencia subieron los precios y se agradaron los spreads. Siguen muy por afuera de lo normal pero acomodaron un poco relativo a la amplitud de ayer. pic.twitter.com/9Kis7IcqCH — AVW (@vwandres) July 3, 2022
He added that there was a high demand for crypto dollars following Guzman’s resignation.
Most Argentine exchanges enhanced the spreads between bid and ask prices to 18%, when normally they are around 2 percent, as a result of the absence of price citations for the U.S. dollar over the weekend.
In a tweet on Sunday, Pablo Sabbatella, the creator of the Latin American-focused cryptocurrency education platform DefyEducation, stated that “Exchanges added a giant spread so that people don’t trade and they [the exchanges] hedge against tomorrow’s opening price.”
Overshooting. No es que subió tanto. Los exchange agregaron un spread gigante para que la gente no opere y cubrirse del precio de apertura de mañana — pablito.eth