In the global cryptocurrency world, the price of Bitcoin is always measured in dollars. As it stands, Bitcoin is trading at $ 9,200, and it has been trading around this price range for almost three months now. But looking at the big picture, of a decentralized currency in an age of economic uncertainty and a global pandemic, should we really consider Bitcoin in dollars?
While global economic superpowers have loosened their monetary policy and has issued liquidity through fiscal policies, other countries in the bottom of the economic ladder do not have the tools of the central bank to do so. Several countries are now in shock from another economic shock as consumption declines and the global supply chain is still sparse. These countries, whose economic situation has gone from bad to worse, faced with failing domestic markets and devalued local currency, are exactly where we should be looking at how Bitcoin is valued.
Jay Hao, the CEO of the OKEx Cryptocurrency Exchange and Futures Markets , said that on the over-the-counter front [OTC], we should examine the volumes of Bitcoin from countries in dire economic conditions . In such a situation, the premiums paid for Bitcoin in local fiat money will increase. He said,
“With regard to over-the-counter trading, we can see even more volume in the countries hardest hit by inflation in their fiat currencies. This is usually the case and when Bitcoin premiums arise. “
Regional data for Bitcoin and premiums paid can be analyzed by looking at P2P volumes on world trade. LocalBitcoins data suggests that while 2020 experienced comparatively low P2P volumes compared to previous years, global volumes have increased since March. More than three months ago, P2P volumes were $ 23.76 million per week and for the week ending July 11, the volume was $ 39.03 million, an increase of 64.68% . In fact, the first week of July recorded a weekly volume of $ 42.7 million, the highest weekly volume in 2020.
Bitcoin Global P2P Volumes | Source: LocalBitcoins
Examination of the data by country shows the degree of this gap between Bitcoin and fiat. Argentina, which has been going through a deep economic crisis for almost a year now, experienced its highest weekly P2P volume last week with 101.44 million ARS or 1.4 million dollars traded, Chile and the Dominican Republic are also experiencing an increase in P2P volumes. Kenya, in the first week of July, saw $ 830,000 in P2P volume, hitting a new all-time high. Other African countries such as Nigeria, South Africa and Tanzania are also seeing increasing volumes.
OTC trade is indeed skyrocketing for countries experiencing economic turbulence as their citizens turn to Bitcoin as a safe haven and a means of capital flight.
