The European Central Bank (ECB) published a working paper exploring the popularity of Bitcoin in emerging economies. It found speculation impacts cryptocurrency prices worldwide. However, in emerging economies, the instability of the local fiat currency is an additional driver of demand. Despite the price volatility, Bitcoin may be viewed as a store of value by those holding unstable local currencies.
Fluctuating advanced economy currencies did not impact cryptocurrency activity. For example, during the period the Australian Dollar, British Pound and Japanese Yen were relatively unstable, but didn’t impact crypto demand.
The research also found that Bitcoin is used for payment transactions in some emerging economies. That’s particularly true for cross border payments where economies have capital controls or for receiving remittances at a lower cost. Our own cursory analysis below indicates remittances could be a major factor.
Article continues …
Want the full story? Pro subscribers get complete articles, exclusive industry analysis, and early access to legislative updates that keep you ahead of the competition. Join the professionals who are choosing deeper insights over surface level news.
