There is still much debate as to whether or not Bitcoin (BTC) can serve as a safe haven in a bad economic situation. An indication that it does so is shown by places where the economy is already under pressure, such as Venezuela or Hong Kong, which is reflected in the volume of trade.
Crisis countries promote Bitcoin trade volume
In several countries in crisis, citizens are worried about their savings, and currency holdings in general are declining rapidly due to hyperinflation and other geopolitical factors. Riots in Venezuela, economic problems in Argentina and government protests in Hong Kong have led citizens to look for alternative stores of value.
According to data from the peer-to-peer Bitcoin trading platform LocalBitcoins, the increase in trading volume is greatest in countries with difficult economic conditions, particularly in South America. Data comparing the years 2019 to 2018 also shows that Bitcoin trading volumes have increased as economies have suffered.
The problems Venezuela was facing until 2019 were repeatedly reported by major news agencies, as Nicolas Maduro’s social regime faced unrest and attempted coups, dragging down the value of local currencies.
As such, Bitcoin became a popular choice for Venezuelans to secure the value of their money, also thanks to Maduro. The Venezuelan president introduced a government-backed, oil-dependent Stablecoin called Petro, which undoubtedly helped educate civilians about crypto-currencies.
By 2019, $305.9 million had been transacted through LocalBitcoins, with Colombia and Peru in second and third place with $134.2 million and $45.5 million respectively. Other countries include Hong Kong, which has become a stronghold of crypto-currencies amid protests, and Iran.
Another interesting trend among these crisis countries is the increase in their trade volume from 2018 to 2019, while for Venezuela, by far the largest trader, growth until 2019 was rather low at only 33 percent.
The country where the volume of local bitcoins increased most in 2019 was Egypt, with growth of almost 70 percent. In Hong Kong and Iran, the popularity has declined somewhat since 2018, but this may be due to the policies that are being implemented to try and stop Bitcoin trading.
The data presented by LocalBitcoins gives an interesting picture of a prominent use case. While the top nations are thinking about the looming recession and are looking for Bitcoin, there are people, in already contested nations, who argue for the importance of a decentralized and isolated financial system.