Bitcoin has just reached all time high in Brazilian Real (BRL) as pictured above, with this being the first time since the genesis block that a major economy monetarily gets significantly out of step with global market prices.
On the surface, things look somewhat OK. Brazil is growing, but only by one point something percent, way less than the general 5% prior to half a decade ago.
Inflation appears lowish, at around 3%, with this country having a trade surplus of some $6 billion.
So what’s the problem? How has bitcoin reached all time high in BLR while their price in dollars is that of the global market at circa $13,000?
The problem is their printer brrrr-ed too much, to the point their money has lost too much value against the dollar, dropping from 4 to 5.6 BRL to the dollar just this year.
That’s while the dollar itself has been weakening, but America remains at a privileged position due to the dominant role of USD in global trade.
Hence bitcoin is not quite at the all time high of $20,000 in America or anywhere else, but it is in BRL and in Iranian money it has been bull running:
You can see the cup and handle U shaped form there near the beginning, with the price then reaching $14,000 during summer 2019.
Here too it reaches the global market price when converting their money into the then dollar price, but since then, this has gone somewhat ballistic, way surpassing all time high in their own money.
The country has not been growing last year, -25% for the first three quarters with data no longer published.
This year it might be doing even worse, although they have not locked down and they do have a trade surplus of $13 billion.
Inflation is very high however at 34%, while the base interest rate is at 18%. Growth used to be as much as 16%, but no longer.
That’s due to fairly high inflation and sanctions, which means less external demand for Iranian money, which means no one wants to convert it for dollars, which means it has been losing value against USD and at a very significant rate.
China however plans to invest some $500 billion in the country, while Iran itself effectively has a government level bitcoin strategy with the crypto there most likely used for international trade.
Argentina’s chart might be the most interesting one because here we can see it all with the shapes familiar, until galloping inflation shows up:
We can see there what remains the global all time high, the first big peak. Then we have the 2018 bear, with the big U cup and handle in 2019, and suddenly the summer 2019 $14,000 is all time high here.
More interestingly, bitcoin doesn’t then gradually bigly drop to end the year at around $3,000. Here instead we have a small drop and then sideways.
Then there’s the Black Thursday 2020 drop, which here is the summer 2019 $14,000 in their money, and then this goes hunululu.
Their current Venus price is still the global $13,000, it’s just ARS has become more and more worthless, so one bitcoin is one million now in their money.
Inflation there is 36%. The same level as interest rates. There is a trade surplus of half a billion for September, but their economy has not been growing since July 2018.
Their GDP therefore has fallen from $650 billion to $430 billion, a huge drop in just two years with their bitcoin chart making it all quite vivid.
In combination Brazil, Iran and Argentina amount to a GDP of $2.7 trillion, as much as France or the United Kingdom.
Meaning it’s not small country money getting out of hand, but big money, with bitcoin being a store of value for them even while its price was falling.
Now if they held, for them and for the rest it would be a good investment for most, but especially for countries where money has been mismanaged.
That’s a category that for some already includes America and Europe where ECB owns 66% of the GDP, but more importantly if the same approach continues, it may well become the many not the few that include America and Europe in the category of mismanaging their money.