Bitcoin Prices Reach $13,500 in Zimbabwe as Military Putsch Triggers Currency Crisis
If you think bitcoin prices are getting out of hand, you clearly haven’t been to Zimbabwe. The African country, which is known for runaway inflation and political instability, offers bitcoin at a 2:1 premium. The price gauge reached epic levels on Wednesday in the wake of a military coup targeting “criminals” around President Robert Mugabe.
Zimbabwe’s Political Crisis
The national army seized power on Wednesday in a coup that has confirmed the arrest of the 93-year-old president. Mugabe, who has been in power for 37 years, is apparently at the center of crimes leading to the “social and economic suffering” of the nation, the army said in a statement broadcast over national airways.
Analysts say that a coup has been in the works since Mugabe axed Vice president Emmerson Mnangagwa on suspicion of plotting to take power.
Bitcoin’s Zimbabwe premium reached historic levels as prices on the major exchanges topped $13,500. That’s more than double the price level offered on most global exchanges.
Demand for cryptocurrency skyrocketed following the military putsch, which agitated an already fragile political situation inside the country. News of the coup sent bitcoin prices soaring by almost 10%, according to local exchange Golix. Political instability, combined with a shortage of fiat money, has made bitcoin much more attractive.
Last month, the Golix exchange commented on the large premium Zimbabweans pay for their digital currency. It said prices have nothing to do with domestic cash shortages, but instead reflect anticipation for government intervention in the cryptocurrency space. Growing support for bitcoin and other digital currency systems may compel the government to introduce new capital controls to limit the growth of non-fiat based money.
As RT reports, Golix has seen roughly $1 million worth of BTC transactions over the past month, compared to just $10,000 for the entire previous year.
Zimbabwe was hit especially hard by the 2008 financial crisis, as hyperinflation erased the local currency. Inflation rose by a staggering 500 billion percent, leading local authorities to drop the currency all together. Since about 2009, the country has relied on the U.S. dollar and South African rand.
The country remains in a protracted economic slump that has cut GDP in half over the past two decades. It is estimated that some 95% of locals are without a job.
Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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