Topic: Can demand from an isolated market like Argentina drive up the BTC/USD price? (Read 342 times)

I just don't feel like it's going to happen because of Argentina, just like it's not going to happen because of Iran. The problems in Argentina aren't new and people were buying Bitcoin there when we were reaching new lows, so if that market couldn't even stop us from falling below the strong support of 6k in 2018, it won't make us go to the moon. That's much harder than defending a strong support.

If a bull market starts it will be mainly due to the exhaustion of sellers and too long bear market. It's already been dragging on for years.

right, not everyone knows about cryptocurrency, with the large number of people using crypto in Argentina at least increasing bitcoin demand, but indeed whether the surge in demand is significant or not, of course if significant it can have a big influence on the development of bitcoin prices

And it depends on the population of people who uses cryptocurrency. Not all people in Argentina knows how cryptocurrency works and how important it is to help the economy grow. Trading volume is also a factor because it will help the bitcoin to spread and create how chart moves because of the records and transactions that was performed. Being an isolated country is good for the adaptation of bitcoin.

It will require Argentina to invest hugely on bitcoin to affect the price. This could be by buying bitcoin on about 3 major crypto exchanges .
This possible as it will  affect the general crypto market, and cause people within South America as it is the second largest country in the region.

The Argentine government is trying to pass an "emergency law" through the Congress which could, again, increase the demand of Bitcoins at the local market (see here). The bill will charge a 30% tax to forex operations for private consumers who exchange local currency into other currencies - be it with credit/debit cards or via local cash exchangers.

This would be again a possible test for the hypothesis I outlined. If local demand of Bitcoins increases drastically due to this bill and people do not only use it to buy foreign currencies but instead HODL Bitcoin, then it could be again push the price. As the bill will come into effect likely next week, the effect could take place at the same time I expect the "dead cat bounce" of the current Bitcoin downtrend.

So, if we see 7000+ or even 7500+ next week and Argentine BTC volume is high at the same time, that could be an indication that my theory isn't completely false

Can it? Sure, will it? I doubt so. We do not live in a perfect world where we assume a country will have insane amount of economical problems so just before the currency goes belly up the people will buy billions of dollars worth of bitcoin both driving up the price of bitcoin and also save themselves from inflation and eventually sell it for more dollars to get their economy back on track.

Would that be awesome for the country and for all bitcoiners? Sure it would be the most amazing thing ever but will it be the reality? I don't think so, it is going to be just a regular inflation where nobody really cares and that is why they will not look into bitcoin. Sure there will be some few but not in a collective nation wide type of situation like how it happened in Cyprus.

of course when there is demand and a large volume it will be able to pump up the price of bitcoin. but if demand increases but the volume is small I don't think it will affect the price. and in my opinion Argentina is a third country and at present the country's economic situation is very bad. they use bitcoin as an alternative means of payment because their fiat currencies are eroded by inflation. I don't think this will affect the price of bitcoin because bitcoin demand is increasing but in small volumes.

From my observations, there are two kinds of Bitcoin users in Argentina.

The first one is using Bitcoin exclusively as a "bridge" to purchase US dollars and other fiat currencies perceived as "hard" in times of forex restrictions. This group more numerous as in many other countries, in relation to the total population - because people here know all means to get dollars, also "alternative" ways like BTC, very well, because of the bad experiences with the local currency. Buying BTC in the local market and then exchange them to dollars abroad is one of  the few completely "legal" ways to acquire more than 200 US dollars as of today, and the most easy to use for normal middle-class Argentines (the other legal ways mostly involve foreign stocks).

The second one is at least parking their money on BTC for some time, because they perceive BTC as better than the local currency, even if it's volatile, and it's a chance if they just "catch" a bull run. This group could grew in the future also because there is much less legal hassle involved: you only have to do KYC/AML locally (if you don't want to use local OTB trading) and not at a foreign exchange site which can be difficult for a South American citizen. It also does expose you much less to the risk of an exchange exit scam.

I expect that if the financial situation in Argentina does not improve, both groups could grow. The second group is still minoritarian but has also more potential to grow, because only a minority has access to foreign USD bank accounts. As I wrote in the OP, if a certain point is reached and the arbitrage market fully develops, this could become influencial for the BTC/USD price.

@Hydrogen: Good points. I have also read about the influence of African cryptocurrency schemes (most of them Ponzi-style) and their impact on the first phase of the 2017 rally, and it seems perfectly possible. However, one would have to check the data of all relevante exchanges to confirm the hypothesis.

Right. If we look at the LBC volume for Argentina, the volume despite reaching all time high after all time high is still pitiful if you zoom out and look at the volumes in other countries.

In this case I would say that it's not one single country to make a difference, but more of these economically weaker countries combined. If you add up the volumes of these economically weaker countries it's still relatively low in the grand scheme of things, but with how illiquid this market is, it will positively contribute in the long run.

If the legal systems there gear towards easier acceptance of crypto as a whole, it will help even more. The infrastructure has to be there to stimulate adoption forcefully.

If people in their millions there wanted BTC then it has to come from somewhere. You don't get special Argentinian BTC. That means less for everyone else to buy.

It hasn't happened yet and it may never. We all know perfectly well that when the crypto press shouts 'Fuckhole nation's population goes ALL IN on BTC' it really means another $500 a week or so in Localbitcoins volume.

I am aware of this fact, 200 Bitcoins back in 2015 was worth about $50 000 (price of BTC around $250), and some 40 Bitcoins today is $300 000. Therefore, we can say that the amount of money that goes through BTC per week has increased by about 6 times. But it is still a small amount of money and an even smaller amount of Bitcoin if we only look at the numbers.

Looking at the whole, it's hard to expect that Argentina alone can make a significant difference in the price of Bitcoin.

If there will be billions of buy order for bitcoin in Argentina then it would easily drive up the price of bitcoin in terms of Bitcoin/Dollar pairing. But if there will be no billions of buy order then it would be impossible for them to even change the price movement even in just a small scale. Manipulating or forcing the chart to move requires at least a few million dollars.

I might be able to cite a few examples of single markets/countries having major effects on crypto prices.

High demand for bitcoin in nations like africa could have played a role in bitcoin hitting ATH in 2017. Africa is known for having a repressive banking industry with extraordinarily high fees and taxes. These circumstances contributed towards BTC being in high demand there. It could have initiated a trickle down effect which affected BTC markets back before cross platform arbitrage loopholes were shut down.

Another possible scenario for single countries influencing cryptocurrency prices is south korea which was known for bitcoin exchanges that charged zero commission on trades. Some claimed this made it possible for whales to engage in market manipulation, driving bitcoin's value through the roof in 2017, without penalty.

And my third example for single countries potentially having a large effect on cryptocurrency prices is china. With the largest single segment of the bitcoin mining industry being housed within china's walls, their mining industry cedes them a very deep and potentially coordinated stream of bitcoin's to dump on markets at prices they determine. This in turn could give china significant control over bitcoin prices, at least until the mining industry becomes more decentralized.

I can't comment on argentina aside from remembering them for having a failing banking industry which utilized bitcoin to make cross border transactions due to it being more affordable in contrast to their own financial transaction networks.

It is very difficult for an isolated -weakened market like Argentina to drive the BTC price up.
The only thing that markets like this one can do is to increase the popularity of Bitcoin and cryptocurrencies so that other stronger markets will push the price higher.

I tend to agree with you even though I have reservations about that manipulation thing. I know that the whales, early adopters, and institutional investors of Bitcoin have so much BTC in their possession, I cannot imagine that they can get together as one in deciding whether to raise the price of Bitcoin or not. As with the cases of Argentina, Venezuela, Hong Kong, and other countries whose economies are affected by domestic problems and are said to be embracing Bitcoin, it has yet to be really proven. News that attach Bitcoin to them are basically coming from crypto-related news publications.

If there is anything that the market have shown us in recent times, its that the activities of an isolated market does not influence the entire crypto market because while the Argentine market was on the increase, the global market was more of constant which later began to decline. It also shows another message which is that the argument of market manipulation is not a cheap action, because if the entire Argentina market volume cannot push the price up, I wonder the amount a group of people would have to invest to pump the market.

Any condition can be happen, but we must prepared for the worst, i mean prepare if it can affect on price bitcoin get dumped. But foe me, i think country with problem like in Argentina, or maybe like what happen in Greece in past, people will start to buy bitcoin at least it will be better because they can sell it in exchange as long it not blocked in their country.

It will all depend whether people there would trust Bitcoin more than USD. If people trusts BTC more, then chances are they are gonna hold their Bitcoins and could potentially bring prices upward. On the contrary, if they would not trust BTC due to its volatility, then it's more probably that they'll immediately go with USD because it's generally more stable and they wouldn't worry about losing too much.

Theoretically yes. There won't be much availability in a country like that so it would have to come from markets elsewhere. But all of the previous cases like Cyprus, Greece, Venezuela etc were a crock of shit in my opinion and straw grabbing by Bitcoin zombies.

And why would any of them choose BTC over USD? You'd be able to get almost any Argentinian to accept dollars. Maybe 1 in 50 or 100 or 1000 would accept BTC.

We have another isolated market to draw on which is South Korea. Throw in their wealth and you wound up with a market that the rest of the world has pretty much chosen to ignore because it's so stupid.

In Argentina, it's not only middle-class "individuals" who are trying to exchange their Pesos for "hard" currency, but above all very wealthy people and also businesses. And Bitcoin is known to them as a way if the official forex market is closed. Actually, at some days the ARS/USD exchange volume was about 1 billion, which had to be covered by the Central Bank. If half of that went into Bitcoin, 500 million dollars (~60K BTC) are a nice amount which could result in a price spike.

However, I doubt that local Bitcoins markets are able to handle such volumes.

There are many more markets in Argentina than Local Bitcoins. There is Ripio, SatoshiTango, ArgenBTC, and Bitex.la (to  mention some I know). Ripio is the only exchange where I can actually see volumes for the ARS/BTC trading pair, which are about 20-40 BTC/week (see here), so it's still very low. So you're right, we currently don't see a Bitcoin run in Argentina, but we also currently are going down with price. As I wrote in the OP, in December when the new government is innaugurated, that may change.

You know the price of BTC in 2015 and 2016, right? But yes, on the whole you're right, for now I don't see an "explosion" at local exchanges, as measured in USD, from 200 BTC back then to 20-40 BTC now the volume increased only slightly (at least at LocalBitcoins and Ripio, the only ones where volume is shown).

As I wrote before, there are very wealthy people in Argentina who tend to use also "alternative" means like ARS->BTC->USD to get "hard" currency and escape the Peso downfall. They even speculate with BTC - Argentina is actually a market where cryptos were embraced early (in 2013 there were already plenty of users and services, and with Sergio Lerner even an Argentine contributed to Bitcoin Core). You may be right that the poorer 50% do not have the means to even think of BTC, but Argentina has a strong upper-middle class which is less affected by the current economic crisis. It's just the poorer 50% who are in trouble now, and most of them never were able to invest in BTC.

I don't think so, it's a technical question about possible influences of an isolated market with no direct connection to the BTC/USD price via arbitrage and other influences due to (BTC) supply changes, and Argentina (a country I know very well) is serving only as an example.