The crypto dollars They are gaining more and more prominence in the Argentine elections. Since their growing adoption in the country in recent years, they have become the economic “thermometer” of electoral resultsby allowing us to anticipate, in a certain way, what effect they may have on traditional markets the next day, on their first business day.
Along with the increase in cryptocurrency transactions and the number of people and companies that operate with them in Argentina, The traded volume and variation in the price of stablecoins also increased on election Sundays, stable cryptocurrencies with 1:1 parity with fiat currencies, especially the dollar, or commodities.
What reasons drove this trend? Historically, Argentines bet on the dollar to preserve their savings from local economic volatility, especially the devaluation of the peso and inflation. In recent years, the “Argentine tradition” of “betting” on the traditional dollar (in banknote) to protect itself from macroeconomic fluctuations its digital variable was addedwhich can be accessed without any type of limit or restriction, 24 hours a day, seven days a week, throughout the year.
Crypto dollar: greater relevance since the 2023 presidential elections
When did they become important as a preview of traditional markets? It can be said that, timidly, in the 2021 legislative elections, but They gained special relevance during the 2023 presidential electionsin which the uncertainty for five months and three electoral dates – from the PASO in August to the runoff in November – about the possible winner, who would change the course of the country, kept Argentines and the markets in suspense, causing high volatility in the price of the dollar, among other economic variables.
In fact, During PASO Sunday 2023, in August, the main crypto wallets recorded double and even triple the operations of a normal Sunday, while the price of the digital dollar increased more than 15%, compared to the previous Friday. The next day, the official dollar jumped and the shares of the main Argentine companies on Wall Street fell.
At that time, the limit was still set for the official purchase of dollars in banknotes, so few people could officially purchase them, with a low quota (up to US$200) and under adverse conditions, since they had to pay a tax that made it 75% more expensive than the official one. Under these restrictions, together with the uncertainty about the near future, and based on previous experience at other times in Argentine history, many chose to buy crypto dollars to protect their income from the potential rise of the dollar, following the results, and its consequent impact on inflation. So, The digital dollar gained prominence as a simple and accessible alternative, without restrictions, to become legally dollarized, at any time, while the stocks continued to become increasingly narrower, given the shortage of dollars in the country.
On October election Sunday, meanwhile, a sharp rise in operations was also recorded and, after the rise of the official dollar, the blue and the crypto in the previous days, its price fell again rapidly when the first results of the polls were known, a decrease that was accentuated after the official calculations that confirmed the holding of a runoff on November 19, with Sergio Massa, the candidate of the ruling party, with a clear difference in favor but not enough to become president.
Meanwhile, on November 19, during the ballot, the traded volume also skyrocketed and the price, prior to the results, rose above 15%; After learning that Javier Milei had been elected, it was adjusted below the maximum, but above the previous value. As the official markets did not operate on Monday, November 20, as it was a national holiday when Sovereignty Day was celebrated, these data were of great interest to estimate what could happen on Tuesday, the first business day. On Wall Street, shares of Argentine companies rose on Monday, while on Tuesday the blue dollar rose and futures market contracts anticipated a strong devaluation ahead of December, the inauguration date of the new president.
How it plays in the current legislative elections
These variations do not only occur in the context of presidential elections, which can imply a 180-degree change in the course of the country. The legislative ones also have their important weight, because they mark the support or disapproval of the current Government, as a kind of “examination” in the middle of its mandate, establishing changes in the composition of both chambers of Congress.
Nor do only the national ones weigh; Others, such as those from Buenos Aires or especially those from Buenos Aires, can affect economic variables. On September 7, the large victory of Governor Axel Kicillof’s candidates against those of the alliance between La Libertad Avanza and Pro, by almost 14 points of difference, marked a strong defeat for President Javier Milei and his allies, with consequences in the markets in the following days.
After a previous week that had not been easy for the national government, the election day began relatively calmly, with a crypto dollar around $1,390, but the volume traded began to grow as the hours went by and, At 6 p.m., at the close of voting, it rose and began to be quoted on some platforms as high as $1,450, only to fall again around 10 p.m., after the official results of the provisional scrutiny were known, but above its initial level. The next day, in the official market the dollar jumped and in several private banks it was sold for $1,470, although it later closed at $1,425 in Banco Nación; Meanwhile, the Buenos Aires stock market was trading lower, as were the shares of Argentine companies on Wall Street.
In the next national elections on October 26, in a context of strong pressure on the dollar and the announcement of measures that try to contain it, the crypto dollar will surely once again gain prominence. Experience and context predict that it will not be a quiet day for the markets.
* Corporate Communication Manager – LLYC Argentina.
Source: Ambito
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