Why Uday Kotak thinks inflation-hit Argentinians are rushing to buy Bitcoin

Indian banker and Kotak Mahindra Bank founder Uday Kotak, in a tweet on microblogging platform X, has linked Argentina's poor macro management to a staggering 276% rise in inflation, which he agreed has forced Argentinians to rush towards more lucrative option, Bitcoin, instead of U.S. dollars.

Replying to a tweet by @unusual_whales, a stocks, options, crypto and market news platform, Kotak said: "When countries manage macro badly, savers move to protect the value of their savings. Traditionally it was gold. Now bitcoin too! While I am not convinced about bitcoin, would it not be better than the Argentinian peso with 276% inflation?"

He was replying to a media report that said rather than going for the traditional approach of exchanging local currency (pesos) for dollars, Argentines buying Bitcoin to protect their wealth against 276% inflation in their home country.

Notably, Argentina, which has a high level of cryptocurrency adoption globally, saw Bitcoin purchases touching a 20-month high in terms of weekly value at the country's local crypto exchange Lemon. The exchange saw 35,000 Bitcoin purchases as of the week ending March 10, 2024, which is almost double in terms of volume compared to the last year.

Argentina is facing the world's worst inflation under President Javier Milei's rule currently. In a bit of respite, the country’s monthly inflation rate slowed to 13.2% in February as compared to sky-high inflation of 20.6% in January and 25.5% in December 2023. However, the 12-month inflation rate surged to 276.2%, causing immense distress among people, and poverty in the country.

Reports say for Argentines, preserving wealth by exchanging pesos for Bitcoin and gold amid sky-rocketing inflation seems like a wise decision as the dollar is being considered as a less attractive investment option.

Bitcoin sees biggest fall since Nov 2022

The world's biggest crypto in terms of value, Bitcoin (BTC), meanwhile, fell over 8% on Tuesday, recording its biggest single-day fall since November 2022. The Bitcoin price fell to under $62,000, recording a 15% slide since the record highs of over $73,500 touched last week. Factors that have been attributed to the Bitcoin price slide include a sell-off from the spot ETFs. Bitcoin is currently down 5.3% to $61,819.57 compared to yesterday's price.

The second largest crypto by market value, Ethereum, is down 7.33% to $3,137.41 since yesterday. The Ethereum prices touched an all-time high of $4,000 last week as the crypto went Dencun upgrade. The crypto, however, fell short of its record high of $4,600 touched in November 2021.

The price of Bitcoin, the biggest cryptocurrency, surpassed the $73,000 level for the first time on March 13, 2024. With this, the market capitalisation (m-cap) of Bitcoin also rose to $1.44 trillion. As per the latest price, BTC has risen 18.53% in the last month, while it surged 128.45% in the past six months. In the calendar year 2024, Bitcoin has seen a 40.28% jump.