In Zimbabwe, a country where hyperinflation led to $1 being worth 35 quadrillion Zimbabwean dollars, the relative security of cryptocurrency already came at a premium.
The recent military takeover of the capital – which generals insist is not a coup – has made made the problem even worse.
Bitcoin prices have risen 10% to $13,499 on Golix, the troubled nation’s only cryptocurrency exchange.
That figure is nearly twice the $7,000 Bitcoin price on U.S.-based exchanges such as Bitfinex.
The surge has been fueled by Zimbabwean investors seeking a safe haven from domestic banks amid the country’s ongoing political, financial and monetary woes. While Zimbabwe once had its own currency, it began using a mix of currencies from stable economies including the U.S. dollar in 2009 after hyperinflation made its own note nearly worthless.
But, as the country’s political situation has worsened, Zimbabweans have continued to hoard money and park it in assets such as Bitcoin — a move that in turn intensifies the country’s lack of hard cash circulating in the economy. Meanwhile, citizens are also worried that the country’s recently introduced “bond note” currency could spur another round of hyperinflation.
Notably, it’s not exactly a deluge of investors flooding into Bitcoin in Zimbabwe. In the last 30 days, Golix has recorded about 146 Bitcoin trades. That’s nearly the same volume traded on the U.S.’s largest exchange Bitfinex every 15 minutes, according to Web Begole at Exante Data.
The low liquidity is also likely causing wide swings in the Bitcoin prices on the exchange. On LocalBitcoins, a peer-to-peer bitcoin platform, some sellers are offering Bitcoin at close to the global average of $7,400.
Curiously enough, despite Zimbabwe’s weak economy, investors have also looked to equities to protect against potential future inflation. In the past year, the Zimbabwe Industrial Index has risen 322%, giving it a market capitalization of about $14.5 billion.