On September 2, the rate of the main cryptocurrency moved closed to $9800, thereby recording a daily increase of nearly 1.40%. This has happened amid statements of restrictions on fiat cross-border remittance over the South American country.
Last week, Bitcoin fell below $ 9,300, but over the weekend keep demonstrating the signs of recovery and rising above $ 9,600. As we can see, something has changed and the cryptocurrency market is ready to resume a rally.
The rise in the BTC rate coincided with reports from Argentina. The current President of Argentina Mauricio Macri signed a decree restricting the purchase of foreign currency.
According to the document, large exporters will need getting for the Central Bank of Argentina’s permission to purchase foreign currency and transfer it abroad. Individuals will not be able to buy more than $10,000 a month. Such measures will be valid until December 31, 2019.
Argentina just imposed capital controls.
Individuals won't be allowed to acquire or wire abroad more than 10,000 dollars per month.
Under Cristina Kirchner, until 2015, this limit was $2,000.
Various restrictions shall be applicable to companies.https://t.co/W00feEXVoy
— Alex Krüger (@krugermacro) September 1, 2019
Macri’s decree states that this step is caused by the need for closer regulation of foreign exchange trade and stimulating the economy. Thus, the government of Argentina expects to deal with the ongoing economic crisis within the country.
Argentinian Citizens Need Bitcoin Now More Than Ever
Following the sharp fall of the national currency Peso, the country’s authorities decided to limit the purchase of foreign currency. Argentina has limited the maximum amount of purchases to $ 10,000. Due to the depreciation of the national currency, companies were also banned from holding reserves in fiat currencies.
Previously, citizens had the right to buy this in the amount of up to $ 2,000. The new rules expand the opportunities for Argentine investors significantly. Besides, the adopted amendments repealed the requirement that a citizen was required to provide income information before purchasing dollars. Note, that the government does not limit the amount of funds that Argentines will be able to keep. They also do not limit the number of transaction.
According to experts, commercial enterprises will actively purchase BTC due to the ban on foreign fiat currency. The Bitcoin exchange rate is characterized by a high level of volatility. However, over the past year, the value of the Argentine Peso has decreased by 50%, and BTC has risen in price by 33.98%. Thus, a digital asset is a much more effective means of saving than a national currency.
The economic situation may worsen in the future. In the period from August 25 to 26 alone. Argentina’s foreign exchange reserves decreased by $ 3 billion and reached $ 15 billion. This year, the South American country will have to pay a debt of $ 7 billion. Experts predict a default over the next five years with a probability of 90%.
Recall, in August the Argentine Peso and government bonds went into a steep peak amid the crushing defeat of incumbent President Mauricio Macri in the primary. At some point, Bitcoin was trading at $ 300 higher on local trading platforms than the average market price of the asset was. This figure rose to $ 1000 at all on the Localbitcoins platform.
A further decline in the Argentine Peso threatens hyperinflation, which will force many Argentineans to look for other ways to save money surely. And cryptocurrency is a very attractive alternative in this situation.
At the press-time, the weighted average of the Bitcoin exchange rate is $ 9,787, and the market cap is about $ 175 billion, according to CoinMarketCap data.
The overall picture is as follows on the market.
As you can see a significant part of altcoins still remains in the red zone despite the rise in the Bitcoin price.