Stressed economic and political conditions are apparently driving the price of bitcoin in disparate parts of the world.
Data gathered by Bloomberg reveals that, despite a recent global drop-off in cryptocurrency price, bitcoin is attracting investment from Argentina and Hong Kong.
The report, published on August 13, 2019, examined the value of bitcoin trades on various cryptocurrency exchanges, including LocalBitcoins.com, claiming that bitcoin has been trading at a 4 percent premium in Hong Kong and a 10 percent premium in Argentina, even as the value of bitcoin worldwide has dropped by 8 percent in the past week.
The value of the Argentine peso has plummeted by as much as 30 percent in the weeks leading up to this study, providing a likely explanation for the interest in bitcoin there. Even as more stable fiat currencies have seen their value proportional to bitcoin improve, tumultuous economies such as Argentina’s remain a potent use case for bitcoin as a store of value.
Although experiencing a less significant uptick in price compared to Argentina, the rising valuation of bitcoin in Hong Kong is arguably even more telling. As protests there have escalated their presence over the past few weeks, journalists have uncovered direct evidence that the mainland Chinese government is preparing a nearby military buildup. The prospect of a violent crackdown seems plausible and sentiment around the fiat currency is likely low.
Bloomberg named the fear in Hong Kong’s political climate as a driving factor for bitcoin’s rising valuation there, and this may be an important signal in bitcoin’s future. The technology was originally invented as a way of creating a borderless currency that provided some security from authoritarianism, and people are apparently using it for that very purpose.