Iran’s Cryptocurrency Exchange Crackdown is Creating a Secondary Market, Says eToro Senior Market Analyst
As Iran starts to apply pressure on its major capital take off, Mati Greenspan thinks the efforts may be in vain as other markets start to rise under the measures to operate the buying or selling of Bitcoin.
Things may not be quite as bad as they seem in Iran as they are in Venezuela, however the situation is beginning to get desperate when it comes to capital markets consideration. For at least some amount of time, the everyday citizens and enterprises in the country have been putting their local economy into Bitcoin to help hedge against the major financial crisis that is happening in the country.
Following the pointing out of $2.5 billion already leaving the country by a parliament member, because of BTC purchases, the government started flirting with the idea of putting a stop to access on the various cryptocurrency exchanges at an ISP level.
At least one of the anonymous Iranian Bitcoin Advocates sates that nearly every exchange in the country has had a block on it since May.
Another senior market analyst at eToro, Mati Greenspan, specializing in capital markets all over the world, remain extremely optimistic on the amount of cryptocurrency markets in Iran even though there is a supposed crackdown.
“[A crackdown in Iran] would create a secondary market for crypto assets within the economy, which—normally speaking—would have a very high markup compared to the asset’s price elsewhere in the world… So, there will be places where they’ll be able to trade peer-to-peer. They don’t need an exchange. Obviously, it’s a lot easier if you have a local exchange that accepts credit cards or bank transfers, but if that infrastructure’s not there, they can still trade it peer-to-peer,” he said.
According to the local Bitcoins market happening in Iran, the country is packed full of people who want to buy or sell Bitcoin. Sellers are mostly willing to play a part in their Bitcoin for at least 530 million rials.
The price exchange turns out to be about $12,370 according to todays rates, which is nearly two hundred percent the markup prices when compared to the normal average for worldwide markets if you ask the people at CoinMarketCap.
“If Bitcoin’s trading at $10,000 across the world, it might trade at $20,000 or $25,000 in Iran,” Greenspan added.
There is no exit Visa needed for Iran, that means anyone could easily exchange their rials to dollars on the illegal market, fly to Tbilisi, then purchase BTC there for a better rate. But, the major markup on illegal markets for US dollars is nearly as bad as the one for BTC.
For just one dollar, the normal Iranian would be projected to pay nearly 85% in markup fees for BTC, making it a rise of almost 86%.
When considering the amount of hyperinflation that the rial has been going through, even the outrageous markups can easily be used to attract Iranians who want to pave their own way to at least a small level of financial security.
Straight across the border in Turkey, it appears that the ingredients are there for a similar phenomenon. Greenspan also has the belief that the current political situation in the country can mirror that of what is being seen in Iran, with the Erodogan consolidating power from under him.
“That’s had a terrible impact on the Turkish lira. We can see that since Erdogan came to power, the currency lost about three or four times its value and it’s impacting the economy. Anybody who’s looking at their finances in Turkey would say, ‘I want to be able to hold onto my money until I retire, and I’m going to have to think about the terrible rate of inflation.’ And they are going to be looking for an alternative for value,” he stated.
While anyone living in the countries who have currency that is somewhat stable, BTC as a potential investment instrument, for those who are living in financially-troubled regions could hopefully see things a little different. For the latter, BTC can also be used as a store of value once and for all.
Some people will obviously find it hard to see cryptocurrencies as being stable, but for those who do or are in serious need of a less volatile currency than what they have available currently, BTC is the right answer. In the volatile markets, cryptocurrencies may become the safest way for them to store their wealth as a type of digital safehouse of value.