For Arenas, dollars and stablecoins bring greater liquidity to Bitso markets.
The executive recommends caution amid bitcoin’s bull run.
In Latin America, the main part of the use of bitcoin and other cryptocurrencies is the safeguard against the devaluation of the local currencies of each country. And although there are extreme cases, such as Venezuela, the truth is that in other parts of the region this scenario also occurs.
Against that backdrop, Mexico-based exchange Bitso Alpha recently launched a new tool. The novelty allows its more than 1.2 million users, cryptocurrency traders such as bitcoin (BTC), ether (ETH) or ripple (XRP), to deposit or withdraw stablecoins, maintain balances converted to dollars and exit with the North American currency through direct bank transfers.
Regarding this launch, CriptoNoticias recently spoke with Eduardo Arenas, director of Bitso Alpha, who gave us more details about his new product, in addition to evaluating the current situation of bitcoin in the market, the growing institutional interest, the panorama that caused the pandemic and the risks of trading for non-specialist traders.
Balances, deposits and withdrawals in dollars
For some years now, Bitso has been interested in the potential of stablecoins in the world of cryptocurrency trading. Arenas went back to the emergence of the first alternatives to tether (USDT), the currency anchored to the dollar created by Bitfinex, and how the increase in alternatives was showing a growing value for this type of asset.
According to the executive, they have long had plans to enable the new form of withdrawals and balances directly in dollars. “The idea is that you can fund any stablecoin and that immediately converts to a dollar balance. Then, funding and withdrawals via bank transfers were included. You can fund and withdraw dollars from the Bitso account “, summarizes the director of the exchange.
For Arenas, having included the new function brings greater liquidity to operations within the platform. For now, the strength of Bitcoin is in Mexico and Argentina, countries in which you can operate with local currency. Soon they will also open in Brazil, although initially it will be more for institutional clients, Arenas advanced. And part of that expansion is more sustained by having pairs in dollars directly, in his opinion.
As our expansion to Latam progresses, having books also in dollars is very important for our growth. In the end it is the most liquid pair.
Eduardo Arenas, director of the Bitso Alpha exchange.
Latin America, devaluation and refuge of value
In addition to facilitating operations and ensuring greater liquidity, Arenas ensures that portfolios that use stablecoins and are not left only with the diversity of cryptocurrencies they tend to have better returns. At least that is shown by data from the exchange, he comments.
The use of pegged currencies helps users avoid the risks of market volatility, but also “being able to get a profit and go straight to USD leaves you protected even from the peso,” says the exchange representative.
Indeed, as CriptoNoticias has recently reported, the loss of value of local currencies has led several countries in the region to reaching its all-time highs (ATH) for the price of bitcoin before this occurs against the dollar. Beyond the case of Venezuela, which is an extreme due to the hyperinflation situation, Argentina, Brazil, Colombia and more recently Chile have exceeded their ATH of bitcoin in local currency.
And in that scenario, many citizens choose to flee from their own currencies seeking a refuge, whether in cryptocurrencies, stablecoins or foreign currencies. In this case, the US dollar is used as an alternative.
Eduardo Arenas, director of the Bitso Alpha exchange. Source: Bitso.
In Mexico, according to Arenas calculations, the local ATH would arrive when bitcoin is hovering around $ 19,000. In other words, with about $ 1,000 still missing from the global historical maximum, the Mexican peso would already be reaching its own mark.
Indeed, one of Bitso’s strengths beyond trading through Alpha, is remittance processing, through Ripple. In May of this year, the platform reached a peak close to 7% of remittances sent weekly from the United States to Mexico. Currently, although lower, they are constantly above 3%, Arenas said.
Bitcoin adoption beyond the haven in Latin America
The devaluation of local currencies, something relatively common in the region, poses to citizens the need to safeguard their funds. But for the Bitso Alpha representative, the adoption of bitcoin and cryptocurrencies can respond to different needs in each particular case.
I don’t think there is a cohesive adoption story for all countries. In the end, countries are different, people are different, their needs are different, and crypto is going to serve them differently.
Director of the Bitso Alpha exchange, Eduardo Arenas.
With that in mind, the specialist has noticed an increase in remittance activity within the region, after simply being a region that receives money from other latitudes. And based on his experience running an exchange, he believes that the biggest use case for cryptocurrencies nonetheless remains primarily speculation.
Data from the exchange shows sustained user growth. There were no particularly significant peaks during the pandemic, something that has surprised them, acknowledged the director of the exchange site.
Bitcoin bull run: parallels to 2017
Over the past few weeks, the price of bitcoin took a significant bullish pace. In just the last 30 days, it went from $ 12,900 to more than $ 18,000 that it has at the time of writing this article.
Just in a matter of days, the value of the pioneering cryptocurrency in the market broke historical levels that were not seen since the run of 2017 and its subsequent fall, in January 2018. In the last 10 days it quickly broke 16,000, then 17,000 and $ 18,000.
The scenario of sustained growth in this period brings back memories of 2017, says Arenas. Curiosity is becoming more and more general, friends who are not normally very interested begin to ask about bitcoin and, In the case of Bitso, it is noticeable in the volumes and in the approach of large clients.
A few days before our interview, the exchange experienced a peak of activity with volumes for this year, above the 19 million dollars traded on its platform. In particular, the BTC-USD pair stood out, with close to 100 bitcoins traded.
Eduardo Arenas, director of the Bitso Alpha exchange. Source: Bitso.
Beyond the conditions, that the scenario is very similar compared to 2017, we see more users buying. It sounds very obvious, but when we have more users buying is when we have an upward price pressure. We see more users returning to the platform to check prices. And we see people who had not been active in the past month, starting to be active again.
Eduardo Arenas, director of Bitso Alpha.
Compared to 2017, The executive sees greater caution among investors at this time. In his opinion, however, it is noticeable how little by little the FOMO is growing, defined in the CriptoNoticias glossary as “fear of being left out”, the fear of losing an investment opportunity with potential for high profits.
Sands considers it possible that the break of the historical maximum generates a feeling of generalized FOMO because the current caution may respond to the fact that we are currently on familiar ground and the psychological barrier has not yet been broken. “Once the $ 20,000 comes in, a lot of FOMO will also come in,” he said.
Among the reasons for the sustained rise in recent months, after falling below $ 4,000 at the beginning of the quarantine, Arenas believes that one of the keys is in the institutional interest, with cases such as MicroStrategy, Square or the Grayscale fund growth.
Already in 2017 it was said that the next wave was going to be much more institutional. I believe that if these types of institutions continue to arrive, the price will skyrocket.
Eduardo Arenas, Bitso Alpha.
Trading, a risky activity
Although the pandemic has not brought large migrations of people to the trading activity, Arenas has data on particular cases in which the quarantine has led people to enter the world of trading.
As an example, he referred to the story of an Argentine client: “We asked her how she entered this world and, although she had an interest in bitcoin for a long time, she is an engineer, she got into trading as a result of the pandemic. It became a quarantine project.
Arenas reminds that those who enter the world of trading must take into account that it is a high risk activity. Source: avanti_photo / elements.envato.com
And although it is an anecdotal case and in volume there have been no major changes, he believes that if the bullish movement continues as it is at the moment, the FOMO could be driving more and more inexperienced people to enter trading.
Therefore, Arenas considered a series of basic recommendations so as not to leave with great losses in the attempt. If you are going to do it, find a solid and safe place to do it. An established company, that is trustworthy, that has good reviews, “he recommended.
On the other hand, he recalled that trading is an activity with a lot of risk and that it should be taken seriously and those risks should be understood. Arenas established that the most important thing is not to put in money that cannot be lost: “not the food, the market, the rent.”
If taking all that into account, the decision is to go ahead and experiment with trading, Arenas finally advises not to have such an active strategy, be patient, have stablecoins as a way to protect yourself from volatility and not be tempted to «guess what it is. the currency of the future.
As we have previously reviewed in CriptoNoticias, in the midst of the bull market, projects and promising opportunities proliferate. In a world of high risk and so complex, Eduardo Arenas, director of Bitso Alpha, sums it up like this: if it is too good to be true, it may very well not be true. Whoever guarantees you a profit is most likely a scam.