Major crypto exchanges reported that consumers purchased up to three times as many stablecoins over the weekend as they usually do amid a brewing economic crisis.
Following the resignation Saturday of Argentina’s economy minister Martin Guzmán amid an economic crisis, Argentines purchased between two and three times as many stablecoins as they do on a typical weekend, crypto companies in the country told CoinDesk.
Three major crypto exchanges said that consumers were looking to hedge against a potential devaluation of the Argentine peso (ARS), whose buying power has plummeted over the past year as inflation skyrockets.
Following Guzman’s resignation, the peso depreciated about 15% against the stablecoins DAI and tether on several leading local exchanges’ platforms. Both stablecoins rose from ARS 245 on Friday to ARS 280 over the weekend. (Following the appointment of Silvina Batakis to replace Guzman as the new minister of economy late Sunday, tether quotations on Argentine exchanges rose to ARS 303 per coin.)
“Whenever there is one of these news stories in Argentina, because of the 24/7 nature of crypto, it is the first market where Argentina starts to look for a price for the U.S. dollar. This drives volumes up,” Sebastian Serrano, CEO of the Argentina-based crypto exchange Ripio, told CoinDesk.
Guzmán’s resignation is part of the latest fallout from a fight between Argentine President Alberto Fernandez, and the Vice President, Cristina Fernández de Kirchner, over the economic direction of the country, which saw inflation in May spike 60% year-over-year.
In addition, Argentina’s central bank is running out of foreign currency reserves, which is hindering imports, among other consequences.
Argentine exchange Buenbit recorded a 300% increase in trading on Sunday compared to the same day in previous weeks, the company told CoinDesk, adding that “many people” used their DAI as collateral to obtain loans in Argentine pesos and purchase more DAI as protection against a potential peso devaluation.
Various local media reports did not rule out the possibility that the government might announce a foreign exchange holiday on Monday to calm markets.
Due to the lack of price references for the U.S. dollar over the weekend, most Argentine exchanges increased the spreads between bid and ask prices to 18%, when in general they are around 2%.
Pablo Sabbatella, founder of the crypto education platform DefyEducation, which focuses on Latin America, tweeted on Sunday that “Exchanges added a giant spread so that people don’t trade and they [the exchanges] hedge against tomorrow’s opening price.”
“Due to demand and without a reference replacement price, prices rose and spreads widened,” tweeted Andrés Vilella Weisz, head of trading and strategy at the Argentina-based crypto exchange Lemon Cash, adding that after Guzman’s resignation, demand for crypto dollars was strong.