Crypto Beans #20 Argentina has a currency crisis, people want store of value assets and more

Hey there everyone! 👋 This is Shivam. I bring to you the 20th weekly edition of Crypto Beans. This is an effort through which I try to share my thoughts on the crypto space and help you stay updated. Your 0 to 1 guide in crypto.

Read time - 4 mins

In this edition, the article I explore is titled "Argentina has a currency crisis, people want store of value assets and more" Hope you enjoy it.

Spill the beans (Explain to me like a 5 year old) 

Argentina has inflation over 100%, People have seen purchasing power deplete by half

1} Argentina is on the verge of financial collapse

The reasons:

1. Record inflation

2. Argentine peso (ARS) devaluation

As per sources, the peso has depreciated 47% against the USD and Inflation is running higher than 118% per year

Inflation is not new for Argentina. It has a prolonged history of inflation. Infact, Argentines think that 30 per cent inflation is the norm. However, inflation over 100% is a new milestone. While we all have suffered from inflation, there is something interesting playing out in Argentina because of this

Some of the effects playing out:

1. Banking loans - Bank financing is rare in Argentina. Most people buy their properties outright with cash. It's little wonder — with interest rates pushed to stratospheric levels

2. Consumer Spending - People are spending currency to buy goods because they say, 'quema la plata', meaning 'burn the money'

3. Cash out of the banking system - People stash their savings in mattresses, in apartment walls, and under the floorboards. Rather than a bank.....

4. Move to USD to save - Dollarization is already in play in Argentina to some extent, many Argentinians save in dollars and accept dollars at their businesses, though peso is still the de facto currency of the country.

Looking under the hood there are few factors at play here:

Factors responsible for this:

1. The rising costs of living

2. Bad economic practices

3. The COVID-19 pandemic

2} What is the solution - Perhaps a hybrid approach that implements the superior qualities of Bitcoin, could serve Argentina better.

Here's why? Currently, Argentina can either:

1.Dollarize the economy but the short-term consequences for dollarization could be dire where people lose their entire lives’ savings, or there is Political unrest or they can leave the country to work somewhere else

2.Officialize bitcoin as legal tender

In order to reduce the immediate shock to the economy, modernize its financial system and offer its citizens alternatives. Today, Bitcoin has a market cap of well over $500 billion dollars. It is leveraged by sovereign wealth funds, hedge funds, insurance firms, tech firms and retail users all across the globe. Argentina has one of the higher crypto adoption in Latin America. The amount of peer-to-peer volume within the country has significantly increased since 2018

In addition, over 60% of Argentinians believe that BTC has capabilities as a store of value with the power to outperform the peso. and...Bitcoin is up 105% year to date, as quoted in Argentine pesos. No wonder they understand how important is Bitcoin in terms of store of value.

With a population that is highly educated in crypto assets and needs a lifeboat, Bitcoin-hybrid dollarization might prove to be a better experience

State of Crypto affairs - A quick look at the market 

The global cryptocurrency market cap today: $1.24 Trillion

Weekly change: -1.34% | Yearly change: -26.91% 

Bitcoin (BTC) is the largest cryptocurrency with a market cap of $567 Billion.

Weekly change: -1.14% | YTD change: 74.19%

Another important metric is Bitcoin dominance which can be used as a rough indicator of the relative strength of Bitcoin versus other cryptocurrencies. A high Bitcoin dominance means that Bitcoin has a large market share and is potentially more influential in the overall cryptocurrency market and vice-versa.

Bitcoin dominance: Current Year: 47.08% | Last year (May 2022): 44.22%

Greed and fear index 

The market sentiment has been greedy for sometime and the meme coins are going wild for the last week. ($PEPE)

Note: The data used is based on metrics like Volatility, Surveys, Bitcoin Dominance, Social and Google Trends. Source: Coinstats

Is ETH ultrasound money? 

Let's have a look at Ethereum supply changes post its merge to a PoS blockchain from PoW, as there is a shift in the narrative for Ethereum to become a store of value due to the expected reduction in ETH emissions.

Supply change since merge POS -178,548 ETH

The graph highlights POS vs POW issuance since the merge. Impressive numbers, look super bullish for ETH long term given the supply of ETH is not growing as before

What's brewing today? Bringing fresh beans to you: 

Pepecoin’s Bewildering Rise Turned a Pittance Into an Almost 5,000,000% Meme Coin Profit: A pseudonymous crypto trader bought trillions of the meme coin three weeks ago on UniSwap for $263, and still holds about $9 million of PEPE after selling several million dollars worth, according to data from blockchain platform Arkham.

Deloitte integrates blockchain for digital credentials: The credentials will be used for regulatory compliance for banking and Decentralized Finance (DeFi), age verification for e-commerce, private logins and fundraising.

Bitcoin Transactions Hit Record High as New Token Type Takes Off: The most recent major development is BRC-20 tokens, fungible assets named after ERC-20 tokens, a token standard which originated on the Ethereum blockchain and is now used by most tokens issued on that chain.

Whats meme-ing? Better make sure this is fun

And now the funny part,

What did you think of today's edition?  

Reach out to me on Twitter or Linkedin for any feedback :)

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.