Crypto Trading in Latin America is Dominated by Stablecoins, Report Says
This trend highlights a growing preference for stable digital assets such as USDT across seven of the region’s leading exchanges.
A new report from research firm Kaiko reveals: Stablecoin cryptocurrency trading has surpassed bitcoin in popularity in Latin America.
Available data shows that users prefer to stay away from volatility. Basically, the instability of local currencies pushes users in the region to look for alternatives in virtual currencies. Therefore, it makes sense that they prefer assets with lower volatility, such as USDT.
Cryptocurrency exchanges offer trading pairs with Latin American fiat currencies, which allows stablecoins to quickly position themselves, according to the aforementioned report. Interestingly, Binance handles almost half of the digital currency transactions in the Latin American subcontinent.
This region is one of the most active in the world in the use of cryptocurrencies. Historic inflation in most Latin American countries is driving millions of people to use tokens as a form of safety. The report notes that Latin America is benefiting from favorable regulatory developments and also has several country-specific factors, such as political uncertainty, rising inflation, and a large unbanked population, that are priming the region for crypto adoption.
Latin America at First Glance
The biggest regional trend was the rise of Brazil. The BRL now dominates crypto crypto trading, with a market share of 53% against the Mexican Peso, the Argentine peso and the Colombian Peso.
The report highlights that while Brazil dominates the LATAM market, its volume is relatively small compared to other regional currencies. is quite small. BRL-denominated crypto trading volume reached $6.9 billion between January and May 2024. However, BRL ranks 7th among global fiat currencies, with only a fraction of the volume of the US dollar, the Korean won and even the euro.
USDT Leads Crypto Trading in Latin America
USDT is presented as the dominant stable cryptoasset in digital currency trading in Latin America. Kaiko highlights that 40% of crypto movements in the region involve the token minted by the company Tether. Meanwhile, stablecoin pairs with fiat currencies accounted for 63% of the top ten trading volumes across the seven exchanges analyzed.
Despite bitcoin’s popularity as a long-term store of value, the dominant trade in the region tends to be short-term. In the latter arena, BTC’s behavior tends to be more volatile and therefore riskier for people’s capital.
According to the report, the boom in stablecoins in Latin America began around 2021. The driving force behind this trend was economic instability in Brazil and Argentina, two of the region’s largest economies. In particular, the report notes that nearly half of all cryptocurrency trading in Brazil involves stablecoins.
The report concludes by noting that while stablecoins remain the most popular trading asset on exchanges, “bitcoin has appreciated significantly against local currencies and could offer citizens in politically unstable situations a better store of value in politically unstable situations.”
As can be seen, crypto trading in Latin America remains at a good level. However, the epicenter in terms of favorability has shifted from bitcoin to USDT. Another reason for this shift could be the psychological impact of the 2022 winter in the cryptocurrency sector. Back then, the price of BTC suffered a significant drop, which created a negative perception.
By Leonardo Perez