There are several factors why Latin America will have a great expansion in crypto technology in this new market cycle, from a macroeconomic point of view it becomes not only a desire, but also a necessity. Acquiring new knowledge in blockchain, as well as the adoption of this technology to boost the economy is an increasingly real possibility, it is not unreasonable to think that Latin America would be one of the regions betting on an exponential growth in the use of cryptocurrencies.
Recently a report was published which reveals the great interest of Latin American countries in using cryptocurrencies, within the study called "Crypto Panorama in Latin America" revealed that much of the population of these countries has bought cryptocurrencies, marking differences trends in the portfolio of the population according to the degree of inflation in these countries.
Cryptocurrencies Vs. Inflation and Economic Problems.
It is no secret that many Latin American countries tend to end the fiscal year with high inflation, as is the case of Venezuela and Argentina, who usually star in the bad economic news on the front pages of the newspapers. Faced with rising inflation, it is normal that ordinary people and companies decide to look for options so that the money in the bank does not depreciate, in this case the stablecoins are the ones that have been quite important in the Latin market, when inflation is the protagonist of the economy.
Argentina currently has the highest percentage of stablecoin use in the entire region, and Colombia (which has a certain exchange rate irregularity) is also one of those countries with a high level of interest. In fact, these countries have increased their stablecoin purchases, following a pattern of first covering the most urgent needs and then moving up a step and betting on other types of assets.
In Argentina, the purchase of stablecoins is higher due to the fear caused by the inflation monster in a hard-hit economy. It is normal for people to look for a safe haven to get their money out of the bank and keep the value. It is known that the dollar has inflation, however, in countries like Venezuela or Argentina the devaluation of the local currency takes place so fast that there is the perception that the dollar never changes its value, although this is not true and price inflation can attack from different sides, the truth is that people want to cover first that need for security in terms of money, that would explain the tendency to buy more and more stablecoins in these countries.
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In Latin America in general, the currency that makes up the largest percentage in the portfolio of a Latino is Bitcoin, however, much of the population where there is more inflation prefer stablecoins, for that reason, the first path of crypto adoption in countries with a high rate of inflation begins with stablecoins, so that ordinary people get used to new technologies and see the opportunities in the blockchain universe.
In countries with more stability, such as Mexico or Brazil, it is logical to think that they have fewer stablecoins in their wallets and more Bitcoin, so their behaviour when buying cryptocurrencies is based on investments, or a refuge of value in the future.
Cryptocurrencies and the Growing Distrust of the Dollar.
Another important aspect for the future is that governments are likely to look for alternatives to the US dollar, the growing debt of the US government reaches an unsustainable point and gradually, many leaders will begin to look to cryptocurrencies as a solution, so there could be an increase in Bitcoin adoption among governments, as has happened in El Salvador. Many have noted how the Central American country has silenced the mouths of its critics by continuing to accumulate Bitcoin and even having a law for the legal use of this asset.
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Although stablecoins are used in much of Latin America, even more than Bitcoin, the next step is to look at other technologically relevant assets such as ETH (which is also an important asset in the portfolios of Latin Americans) and even a future adoption of assets such as Hive, as a decentralised alternative in terms of value, technology and scalability in Latin America, could be on the table.
Cryptocurrency legislation
As I have repeatedly mentioned, this new crypto expansion, fuelled by institutional adoption in SEC-approved ETFs, will change the outlook for individuals, companies and even governments, which must prepare to create a legal structure for the use of cryptoassets in the face of expanding demand for cryptocurrencies.
OKX Expands into Latin American Market
The growing demand for cryptographic services in Argentina has led exchanges such as OKX to have a strategy of expansion in Latin America, with an important focus on Argentina because this country is already beginning to have legal bases for the use of cryptoassets and is one of those with a growing demand for this type of services.
Demand for cryptographic services will continue to grow in 2024
Latin America will have an increased demand for cryptographic services, whether for the use of stablecoins, investing in Bitcoin or even other assets, many companies will look to the Latin market as new opportunities for technological expansion and adoption and this effect is possibly already beginning in 2024. Cryptocurrencies such as BTC and ETH are becoming increasingly popular in this region, marking a possible trend in terms of adoption.