Post-Halving Report: Brazil Could Be a New Source of Bitcoin Demand
Bitcoin’s year-to-date performance compared to the Brazil’s Real together with the country’s financial woes may drive demand towards the cryptocurrency.
As the new report published on May 11 by Delphi Digital titled “The State of Bitcoin”, Brazil’s central bank lowering its interest rates to 3% and the fact the Real had lost 30% of its value relative to the U.S. dollar could scare away investors “who find the risk-reward tradeoff no longer attractive” in certain local markets.
Delphi Digital suggested that this potential exodus could cause a greater demand for Bitcoin (BTC) in Brazil:
“This is not to say that capital flooding out of emerging markets will flow right into bitcoin… but the sheer size of this potential move could serve as another demand source for BTC, especially if tighter capital controls become more commonplace.”
BTC had the best YTD performance compared to the Real — 74% — far surpassing that of the U.S. dollar, coming at at 21.9%.
The state of crypto in Brazil
Though the country’s Bitcoin market with rising demand might be getting more attractive for investors, crypto in Brazil has faced their share of regulatory challenges and influential critics. Four companies focused on Bitcoin trading have closed since 2019. Even the President of the Brazilian Banking Federation has stated that cryptocurrencies are not really currencies at all.