Bitcoin is slightly down again today to $6,400, but a number of hot-spots are apparently developing across the world as told by local premiums.
We recently wrote about South Africa seeing a persistent 6% premium for bitcoin and other cryptos. A number of news, both good and bad, have come from there which perhaps suggests awareness and therefore adoption is growing in one of Africa’s richest nation.
Turkey has developed a crypto premium there and the reason is because their fiat money is crashing, with Turkish Lira down 20% today.
Brazil, too, interestingly, is showing a $300 premium for bitcoin across many of their exchanges. Bitinka, which handled nearly $25 million in trading volumes during the past 24 hours, shows a significant premium in bitcoin’s price against Brazilian money.
That premium against BRL seems to be less on their website when we tried it. We are shown a price of 25,832 Brazilian real for one bitcoin. Google tells us that’s worth $6,700, while bitcoin’s current price on global exchanges is at $6,400 at the time of writing.
It is unclear here whether CoinMarketCap uses a different Foreign Exchange method to Google, but a $300 premium is significant.
Another exchange, Foxbit, which has some half a million users, shows bitcoin’s price at around $6,650 against real money and at a $150 premium even against the dollar.
A third exchange, NegocieCoin, likewise has a circa $300 premium against Brazilian Real, suggesting that this is probably a country wide phenomena.
But why is there such premium? The obvious answer is supply and demand. The latter appears to be higher in Brazil than western nations with arbitrage seemingly not yet quite sufficient to close the gap.
The reason for such higher demand might be more due to regional than local causes. That potentially being a currency crises of sorts that has engulfed some of Latin America.
Venezuela, of course, now hardly has a currency, but Argentina too saw a plunge in the value of their money earlier this summer, although the situation appears to have stabilized somewhat there.
Where Brazil is concerned, its value is also falling against the dollar, although not as acutely as in some other locals.
Inflation in Brazil is higher than in the west, but still at just 4%. One theory therefore might be that the premium has more to do with neighboring regions buying bitcoin in Brazil, but there is cause to doubt this because bitcoin is seeing no premium against Colombian money save for in one exchange which is experiencing banking problems.
It thus appears more reasonable to suggest that instead of regional, this is a local premium, probably due to an increased adoption of Bitcoin in the country, or perhaps a combination of regional and local causes.
One reason for such increased adoption might be because they do not have a convenient banking system as known in the west.
Brazilians, thus, might be storing at least some of their savings in crypto, rather than under the mattress, with the general regulatory situation there appearing to be neutral if not friendly.
This March, for example, the Brazilian state bank tokenized real on ethereum’s public blockchain with the aim of increasing transparency in public tenders.
That suggests Brazil has some tech skills and they perhaps see the opportunities, with the premium potentially due to a slightly higher level of monetary instability there than in the west.