A bitcoin price premium has developed in Argentina as the government imposed currency controls in a bid to support the peso. | Source: Shutterstock

Argentina’s decision to impose currency controls has had a bullish effect on bitcoin in the South American country. With demand rising for the cryptocurrency, a bitcoin price premium has subsequently developed. The premium in Argentina now ranges between tens and hundreds of dollars.

While the bitcoin price ranges between $9,887 and $9,905 on major global cryptocurrency exchanges, on Argentine crypto exchanges the price varies between $10,025 and more than $10,915.

Bitcoin Price on major global exchanges | Source: TradingView

On SatoshiTango, for instance, the Bitcoin price is $10,082.

Bitcoin price on SatoshiTango

Top buyers on peer-to-peer crypto exchange LocalBitcoins, on the other hand, are willing to pay up to 644,000 ARS ($10,915) per bitcoin. This translates to a potential bitcoin price premium of over $1,000.

Bitcoin price on LocalBitcoins (1 USD equals 59 pesos)

What’s driving the bitcoin premium?

Besides increased demand for the cryptocurrency, there is also a black-market effect on the bitcoin price in Argentina.

The currency controls which were imposed on Sunday will require exporters and individuals to get the permission of Argentina’s central bank, Banco Central de la República Argentina, before buying foreign currency. U.S. dollar purchases by individuals will be capped at $10,000. The restrictions will remain in place until year-end.

These restrictions have consequently made the forex black market in Argentina instantly popular among those who need to sidestep the caps. When converting the local currency to the greenback, the official rate is 59 Argentinian pesos to every U.S. dollar. On the black market though, the rate is about 64 Argentinian pesos per dollar, according to Reuters.

Why has Argentina imposed the currency controls?

The new currency controls imposed come following the Argentine government’s inability to stop the depreciation of the peso and halt heavy investment outflows.

The primary election last month saw current business-friendly President Mauricio Macri trailing Alberto Fernandez, a populist, making the latter the front-runner in the Oct. 27 general election. Since then, the peso has lost nearly 25 percent of its value.

Besides currency controls, Argentina’s double-digit inflation has also contributed to the popularity of bitcoin in the Latin American country. Currently, the inflation rate is estimated to be over 55 percent.

You May Also Like

3 Key Things the Mainstream Financial Media Is Missing About Bitcoin

Mainstream media is out spreading fear, uncertainty, and doubt (FUD) about bitcoin…

Ethereum’s Vitalik Buterin to Sign ‘Free Virgil Griffith’ Petition Following FBI Arrest

Ethereum co-founder Vitalik Buterin is signing a petition to free estranged Virgil Griffith who was arrested by the FBI on thanksgiving.

Analyst Explains Why Bitcoin Price Could Plummet to $2,020 in 2020

An analyst says bitcoin could crash to $2,000 to $3,000 range as…

VeChain (VET) Jumps a Whooping 26%, Thanks to an Iconic Retro Game Remake

Contrary to the rest of the crypto market VeChain (VET) is up 26% today and showing no signs of slowing down, but what’s driving the token?

Bitcoin Price Suffered 31% November Slump But a Hostile China Boosts Outlook

Bitcoin price dropped by 31% since October. Yet, Spencer Bogart sees strengthening fundamentals pushing BTC up in the medium-term.

Limited Edition Bitcoin Watch Beckons Mt. Gox Remnants

A limited edition bitcoin watch with a widely known Mt. Gox wallet was spotted in Abu Dhabi. Is the royal family linked to the scandal?