Kaiko Report Unveils Latam’s Stablecoin Preference Over Bitcoin

• Latam crypto traders favor stablecoins, especially USDT, making up 40% of trading volumes, over Bitcoin.
• Brazil’s high inflation drives nearly half of real-based trades to stablecoins, reflecting currency instability.
• Binance’s dominance in Latam shows 63% of top trades are stablecoin-to-fiat, influencing CBDC consideration.

A recent market report issued by Kaiko, a prominent cryptocurrency market data analytics firm, highlighted a significant trend in Latin American (Latam) crypto trading. The report revealed that Latam cryptocurrency users prefer stablecoins over Bitcoin. This preference is particularly evident with Tether’s USDT, which constitutes 40% of the trading volumes in the region. This trend continues despite Bitcoin’s appeal as a hedge against currency debasement, a common issue in many Latam countries.

The Kaiko report analyzed data from seven major cryptocurrency exchanges that offer trading pairs involving Latam currencies. These exchanges include Kucoin, Binance, Mercado Bitcoin, Bitso, Htx, Okx, and Bitfinex. The analysis reveals that the trend towards stablecoins has surged since 2021. 

Notably, stablecoins are particularly popular in Brazil, where almost half of the trades involving the Brazilian real include stablecoins. This preference is driven by the instability of the Brazilian currency and the high inflation rates in the region.

On three of the seven exchanges analyzed, stablecoins emerged as the most traded instruments. Mercado Bitcoin was the only exchange where Bitcoin volumes surpassed those of stablecoins. Despite Bitcoin’s narrative as a protection against inflation and currency debasement, this use case has yet to significantly penetrate Latam audiences.

Binance, which handles nearly 50% of the cryptocurrency trading volume in the region, also demonstrates a strong preference for stablecoins. Furthermore, stablecoin-to-fiat trading pairs accounted for 63% of the top ten trade volumes. This preference for stablecoins is influencing central banks in the region to consider central bank digital currencies (CBDCs) as an alternative. However, it remains uncertain if CBDCs can effectively compete with existing stablecoins.

The report’s findings are significant because they highlight a divergence in cryptocurrency usage in Latam compared to other regions. While Bitcoin is often touted as a hedge against inflation, Latam users seem to prioritize the stability offered by dollar-pegged stablecoins. This preference can be attributed to the economic challenges faced by many countries in the region, including high inflation rates and currency instability.