Brazil’s crypto carnival still in full swing despite volatility of currencies

The number of people investing in cryptocurrency is now more than double those putting money into tradition stocks, while Bitcoin trading has skyrocketed.

Interest in cryptocurrency is growing fast in Brazil. In fact, the number of people registering accounts with crypto exchanges is increasing by 3.5 times per year and Bitcoin investments are growing even more quickly.

In a country with over 208 million in population, about 1.4 million people have registered accounts with crypto exchanges. And if these numbers don’t convince, here are some more: the number of people investing in cryptocurrencies more than doubles those with stock brokerage accounts, which currently stand at about 650,000.

An example of the hype among the people of the largest Latin American economy is based on crypto exchange Foxbit’s statistics that show it had 100,000 users in 2016, while currently, it boasts more than 400,000.

Another of the three major crypto exchanges in Brazil – which combined process 95% of all cryptocurrency transactions in the country – Mercado Bitcoin reached 750,000 users by the end of 2017, which meant a 275% leap in comparison to 2016. This exchange is reporting 5,000 new users daily. The Bitcoin to You exchange has seen an increase as well. It currently serves over 300,000 unique users.

Reason for the growth?

Experts in Brazil believe the number of people trading cryptocurrencies and the daily trading volume may be significantly higher considering that many Brazilians are likely registered with foreign exchanges.

According to one of the country’s most influential news outlets, Globo, the increase in Bitcoin and altcoin investors is primarily due to BTC reaching a valuation of nearly $20,000 in late 2017. It adds that the dramatic fall in the price of all cryptocurrencies has not scared the locals off.

Mercado Bitcoin CEO Rodrigo Batista told Globo that “to be true, the variable that explains the increase in interest is the jump in the price of Bitcoin towards the end of last year.” Bitcoin to You CEO Andre Horta says that the drop in profitability of other more traditional investments has also been a factor in crypto growth.

Foxbit CEO Guto Schiavon comments: “From one day to the next, the daily volume has gone up five times and we have not been able to meet this demand.” In fact, in December 2017, Foxbit was forced to suspend service to maintain quality.

There’s room for more crypto exchanges in Brazil, an opportunity that for the moment has been seen by Houbi, CryptoHub and XP Investments. The latter one, according to crypto experts, could soon become the Binance of Brazil.

Bitcoin trading is crazy too

The statistics showing growth in crypto investments are impressive too. Brazilians traded $160 million (£122 million) in Bitcoin in 2016, and one year later, the volume increased to $2.4 billion (£1.8 billion).

This number is expected to grow even more this year. In April, the daily estimated transaction volume of the largest country in Latin America was about 5,000 BTC, which is equivalent to nearly $38 million ($29 million). At this rate, by the end of this year, the total trade volume of Bitcoin will have reached $12.8 billion (£9.8 billion).

In the meantime, the government has slowly been changing its crypto stance. The country’s Securities and Exchange Commission (CVM) has a working group discussing regulations for investing in crypto assets. The outcome of the debate is still uncertain. Earlier this year, the CVM banned registered investment funds from trading crypto, but shortly after, they allowed for indirect ownership of crypto coins. So, essentially, the CVM has gone from a negative view on crypto, to a neutral one.

Meanwhile, on the academic front, Brazil now has one of the worlds first Masters degrees in Cryptofinance.

“For the guys who used to hide dollars under their mattresses, now they are hiding it in Bitcoin,” says Eduardo Ferreira, Head of International Business Development at Foxbit London. When asked who in Brazil is buying crypto, he responded: “It’s students buying it. It’s 60-year-old bus drivers.”

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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