In-depth analysis of the Latin American cryptocurrency market in 2024

In 2021, El Salvador became the first country in the world to accept Bitcoin as legal tender, which caused a great sensation around the world and set an example for Latin America to dare to innovate. This decision by El Salvador not only changed the country's financial system, but also boosted the interest in cryptocurrencies throughout Latin America, showing the region's openness to new technologies.

Aiying Aiying summarizes the "LATAM Market Report" released by Kaiko to take you to understand the current status, main trends and future prospects of the cryptocurrency market in Latin America in 2024. We will look at the market conditions in various countries, which coins people like to trade, and the development of local exchanges. Through these contents, you will discover Latin America's unique position and development potential in the global cryptocurrency market. Whether it is because of the political environment, economic pressure, or technological innovation, Latin America is promoting the widespread use of cryptocurrencies in its own way.

I. Market Overview of Latin America

1. Market Background

In Latin America, political instability, inflation and a large number of unbanked populations have been plaguing many countries. It is for these reasons that more and more people are beginning to pay attention to and adopt cryptocurrencies.

First, political instability is an old problem in Latin America. From frequent regime changes to various policy changes, the financial systems of many countries lack stability. For example, in countries such as Argentina and Venezuela, political turmoil has led to serious economic problems and devalued traditional currencies. For ordinary people, cryptocurrencies have become a hedge tool. They can protect their property from the devaluation of their own currencies by holding cryptocurrencies such as Bitcoin.

Second, inflation is very serious in some Latin American countries. Take Argentina as an example, its inflation rate exceeded 200% in 2024. Such high inflation has forced people to find new ways to preserve wealth. Cryptocurrency has become a good choice because of its decentralized and anti-inflation characteristics. Many people convert part of their assets into Bitcoin or stablecoins to counter the rapid depreciation of their national currencies.

Finally, the large number of unbanked populations is also an important reason for the popularity of cryptocurrencies in Latin America. Many people cannot use traditional banking services for various reasons, but as long as they have a smartphone, they can trade and save through cryptocurrencies. This not only facilitates the circulation of funds, but also provides these people with more opportunities for economic participation.

2. Market growth expectations in 2024

Looking forward to 2024, the cryptocurrency market in Latin America is expected to usher in significant growth. This is mainly due to the following factors:

• Policy support and improved supervision:

• Governments have begun to realize the potential of cryptocurrencies and have introduced supportive policies. For example, Brazil launched the central bank digital currency (CBDC) in 2021 and gradually improved relevant regulations to make the market environment more friendly and standardized.

• Other countries are also actively following up. For example, Argentina has established a registration system for cryptocurrency exchanges in 2023. These measures provide legal protection for the development of the cryptocurrency market.

• Technological innovation and infrastructure construction:

• Latin American technology companies and financial institutions continue to launch new cryptocurrency products and services, attracting a large number of users. For example, Brazil's Itau Unibanco launched Bitcoin and Ethereum trading and custody services, further promoting the popularity of the market.

• Major exchanges are also constantly optimizing technology, improving transaction efficiency and security, and enhancing user trust.

• Driven by the economic environment:

• The problems of high inflation and currency depreciation remain severe, and people's demand for cryptocurrencies continues to grow. Especially in countries such as Argentina and Venezuela, more and more people regard cryptocurrencies as an effective tool to fight inflation and protect their property.

• At the same time, with the digital transformation of the economy, the use scenarios of cryptocurrencies are also expanding. From cross-border payments to daily consumption, cryptocurrencies are gradually integrating into people's lives.

• Market education and user awareness:

• With the passage of time, more and more people are beginning to understand and recognize the value of cryptocurrencies. The increase in various education and publicity activities has led to a continuous increase in the acceptance and use of cryptocurrencies by ordinary people.

Overall, Latin America has good conditions for the rapid growth of the cryptocurrency market. Policy support, technological progress, economic environment needs and user awareness are all important factors driving market development. It is expected that in 2024, the cryptocurrency market in Latin America will usher in a new round of rapid development, showing great potential.

2. Highlights of the Latin American Market

1. Bitcoin Legalization in El Salvador

El Salvador made history in 2021 by becoming the first country in the world to use Bitcoin as legal tender. This bold move has not only attracted the attention of global media, but also aroused widespread discussion in the international financial community.

El Salvador's legalization of Bitcoin began with a proposal by President Nayib Bukele to promote economic development and financial inclusion. Bukele believes that Bitcoin can help a large number of Salvadorans without bank accounts enter the financial system while attracting investment and tourism from the global Bitcoin community.

To support this policy, the Salvadoran government has introduced a series of supporting measures:

• Establishment of the national digital wallet Chivo:

• The government has developed a digital wallet called "Chivo" which is available to all citizens and gives each new user $30 worth of bitcoin to encourage its use and popularization.

• Building Bitcoin Infrastructure:

• El Salvador has installed Bitcoin ATMs across the country to facilitate people's deposit, withdrawal and transactions of Bitcoin.

• Promoting Education and Training:

• The government has cooperated with non-profit organizations to carry out cryptocurrency-related education and training programs to help citizens understand the use of Bitcoin and the potential risks.

This series of measures has given El Salvador a unique position in the global cryptocurrency market and has become an object of study and reference for other countries. Although this policy also faces some challenges in its implementation, such as technical problems and resistance from some people, the legalization of Bitcoin in El Salvador has undoubtedly explored new possibilities for the application of cryptocurrency.

2. Brazil's leading position

As the largest economy in Latin America, Brazil is also at the forefront in the field of cryptocurrency. Brazil has not only made positive attempts in policy and regulation, but has also made significant progress in technology and market innovation.

• CBDC Launch:

• The Central Bank of Brazil announced the launch of a research and development project for a central bank digital currency (CBDC) in 2021. Through CBDC, Brazil hopes to improve the efficiency of the financial system, reduce transaction costs, and promote financial inclusion. Currently, Brazil's CBDC project has entered the testing phase and is expected to be fully promoted in the next few years.

• The launch of cryptocurrency ETFs:

• In 2021, Brazil launched Latin America's first Bitcoin ETF and Ethereum ETF. These ETFs are listed and traded on the Brazilian Stock Exchange (B3), providing investors with convenient channels for cryptocurrency investment. The launch of ETFs has not only attracted the attention of a large number of local investors, but also driven the inflow of international capital.

• Improvement of market supervision and legal framework:

• Brazil passed the Cryptoassets Act in 2021, which provides a clear legal basis and regulatory framework for the cryptocurrency market. This legal framework covers the trading, custody, issuance and other aspects of cryptocurrencies, aiming to protect the interests of investors and combat money laundering and other illegal activities.

• Participation of local financial institutions:

• Large Brazilian financial institutions, such as Itau Unibanco and Banco Bradesco, are actively involved in the cryptocurrency market. Itau Unibanco launched trading and custody services for Bitcoin and Ethereum in 2024, further promoting the popularity and development of the market.

Through these measures, Brazil has established a leading position in the Latin American cryptocurrency market, attracting not only a large number of local users, but also the attention of global investors. Brazil's experience shows that policy support, market innovation and technological progress are key factors in promoting the development of the cryptocurrency market.

3. Trading activities and market trends

1. Trading volume and market share

In Latin America, the volume of cryptocurrency trading has shown a significant growth trend, with different performances in different countries, but overall showing strong development momentum. The following is an analysis of the trading volume and market share of each country, with a focus on Brazil's dominance.

• Brazil's Dominance:

• Brazil dominates the Latin American cryptocurrency market, and its trading volume has grown significantly in 2024. According to statistics, Brazil's cryptocurrency trading volume reached $6.9 billion between January and May 2024, accounting for 53% of the Latin American market. This growth is due to Brazil's cryptocurrency-friendly policy environment and strong domestic demand for mainstream cryptocurrencies such as Bitcoin and Ethereum.

• Brazil's market share far exceeds that of other countries. Although trading volumes in countries such as Mexico and Argentina are also increasing, their market shares are relatively small. This dominance of Brazil is reflected not only in trading volume, but also in the activity of exchanges and the number of users.

• Mexico's Market Share:

• Mexico is the second largest cryptocurrency market in Latin America, and its trading volume is mainly concentrated on the local exchange Bitso. Bitso has a 99.5% share of the Mexican market, while international exchanges such as Binance and Bitfinex have a relatively small market share. Despite the increase in trading volume, Mexico's overall market share is still lower than that of Brazil.

• Argentina's Market Share:

• Argentina's cryptocurrency market also showed significant growth in 2024, particularly driven by high inflation and currency depreciation. Argentina's trading volume increased by more than 400% between January and May 2024, but its market share remained lower than that of Brazil and Mexico due to its smaller overall market size.

  
  

2. Inflation and currency depreciation

Inflation and currency depreciation are important factors driving the increase in cryptocurrency trading in Latin America, especially in countries such as Argentina.

• High inflation in Argentina:

• Argentina's inflation rate exceeded 200% in 2024, and the currency continued to depreciate, leading to a surge in demand for cryptocurrencies among local residents. Bitcoin and stablecoins such as USDT have become the main tools for Argentines to fight inflation and protect their property. Against this backdrop, Argentina's Bitcoin trading volume has increased several times in a short period of time, especially on the local exchange Bitso and the international exchange Binance.

  
  

• Due to the dual pressures of inflation and currency depreciation, Argentines are increasingly inclined to convert part of their assets into cryptocurrencies to maintain their value. This trend became particularly evident in 2024, leading to a significant increase in trading volume.

• Other countries:

• Venezuela is similar, with high inflation and economic crisis making Bitcoin and other cryptocurrencies an important safe-haven tool. Despite Venezuela's relatively small market size, its cryptocurrency trading volume has also grown significantly.

• Countries such as Colombia and Peru have also been similarly affected. Although these countries have relatively low inflation rates, economic uncertainty and political turmoil have prompted more people to turn to cryptocurrencies.

• Role of stablecoins:

• Stablecoins play an important role in combating inflation and currency depreciation. Since their value is pegged to stable currencies such as the US dollar, stablecoins provide users with a stable way to store value. In Latin America, the use of stablecoins such as USDT in transactions has increased significantly, becoming the main tool for trading with local currencies.

Overall, Latin American countries show different characteristics in terms of cryptocurrency trading volume and market share. Brazil has dominated with its friendly policy environment and strong market demand, while Argentina and other countries have driven the widespread adoption of cryptocurrencies due to the pressure of high inflation and currency depreciation. In the future, as the economic and policy environment changes further, the Latin American cryptocurrency market is expected to continue to grow and show a more diversified development trend.

IV. Trading preferences and major exchanges

1. Popularity of stablecoins

In Latin America, stablecoins have been widely welcomed due to their relatively stable value and easy convertibility, and have become an important choice for many investors and ordinary users.

• Dominance of stablecoins:

• Value stability: Unlike volatile cryptocurrencies such as Bitcoin and Ethereum, stablecoins are usually pegged to stable currencies such as the US dollar and can provide a relatively stable value store. For Latin American residents facing high inflation and currency depreciation pressure, stablecoins are a reliable choice.

• Transaction convenience: Stablecoins can be conveniently used for daily transactions and cross-border payments. Many Latin American users use stablecoins such as USDT for savings, transfers and payments, which greatly improves the convenience and efficiency of financial transactions.

• Use scenarios:

• Daily consumption and savings: In countries with severe inflation, such as Argentina and Venezuela, residents are increasingly using stablecoins for daily consumption and savings to avoid the risk of depreciation of their own currencies.

• Cross-border remittances: Because stablecoins can be transferred quickly and at low cost around the world, many Latin American immigrants working abroad choose to remit remittances back home through stablecoins, avoiding the high fees and exchange rate losses of traditional remittance methods.

• Market data:

• Stablecoin trading accounts for a large proportion of cryptocurrency exchanges in Latin America. Taking Brazil as an example, nearly half of BRL (Brazilian Real) trading pairs in 2024 involve stablecoins. Overall, more than 40% of Latin American cryptocurrency transactions are related to USDT, indicating the important position of stablecoins in the market.

2. The rise of local exchanges

Although Binance is the largest cryptocurrency exchange worldwide, local exchanges such as Bitso and MercadoBitcoin are gradually rising in Latin America, posing a challenge to Binance's market share.

• Challenges facing Binance:

• Legal and regulatory issues: Binance faces legal and regulatory challenges in several countries around the world, including the United States, Nigeria, and the Philippines. In Latin America, Binance also faces legal problems for alleged violations of local regulations. In 2023, Brazil's congressional committee recommended the prosecution of Binance's founder Changpeng Zhao and three of its Brazilian executives, which affected Binance's market position in Brazil.

  
  

• Insufficient localized services: Although Binance provides a wide range of cryptocurrency trading services worldwide, it still lacks localized services, especially for the needs of Latin American users. Local exchanges can provide services and support that are closer to user needs, attracting a large number of users.

  
  

• The rise of local exchanges:

• Bitso:As the largest cryptocurrency exchange in Mexico, Bitso occupies an important position in the Latin American market. In 2024, Bitso's market share in Mexico reached 99.5%, almost monopolizing local cryptocurrency transactions. Bitso attracted a large number of users by providing localized payment solutions and low transaction fees.

• MercadoBitcoin:Brazil's MercadoBitcoin also achieved significant growth in 2024, with its trading volume doubling in one year. This growth was due to its payment institution license from the Central Bank of Brazil, which improved its regulatory compliance and user trust. In addition, MercadoBitcoin continues to expand its cryptocurrency product line, attracting more investors and traders.

  
  

• Trading Pair Analysis:

• Binance, HTX, and KuCoin: Stablecoins are the most traded crypto assets on these international exchanges. This shows that although these platforms offer a variety of cryptocurrency transactions, users prefer to use stablecoins for transactions, mainly due to their stable value characteristics.

• Bitso: On the Mexican Bitso exchange, XRP has the highest trading volume. This trend is mainly due to Bitso's close partnership with Ripple (the issuer of XRP), which has attracted a large number of XRP transactions.

  
  

• MercadoBitcoin: As the only local exchange with the highest Bitcoin trading volume in Latin America, MercadoBitcoin is more in line with global trading trends. As the world's most well-known cryptocurrency, Bitcoin's trading volume on MercadoBitcoin shows that Brazilian users have a high degree of recognition and demand for Bitcoin.

• Market share and competition landscape:

• Market share: Although Binance has a large market share globally, its market share in Latin America is constantly being eroded by local exchanges. In 2024, Binance's share of the Latin American market fell to 49.69%, while Bitso and MercadoBitcoin accounted for 40.68% and 9.24% of the market share respectively.

  
  

• Competitive advantages: Local exchanges have won the favor of users by providing services that are more in line with local needs, low transaction fees and better customer support. At the same time, facing Binance’s regulatory dilemma, local exchanges seized the opportunity and further expanded their market share.

  
  

In summary, stablecoins dominate the Latin American market and have become an important tool to deal with inflation and currency depreciation. At the same time, local exchanges such as Bitso and MercadoBitcoin have gradually risen with their localization advantages and flexible service models, challenging Binance’s market dominance. In the future, with the intensification of market competition and the continuous changes in user needs, the cryptocurrency market in Latin America will show a more diversified and vibrant development trend.

V. In-depth analysis of various countries' markets

1. Brazilian market

Brazil is the largest economy in Latin America, and its cryptocurrency market has also shown strong growth momentum. In 2024, Brazil's cryptocurrency market showed the following notable characteristics:

• Market growth:

• Brazil's cryptocurrency trading volume increased significantly in 2024, reaching US$6.9 billion from January to May, nearly doubling from the same period in 2023. This growth was mainly driven by the increase in trading volume of mainstream cryptocurrencies such as Bitcoin and Ethereum.

• Brazil's cryptocurrency market not only performs well in trading volume, but also leads in the number of users and market activity. More and more Brazilians are beginning to accept and use cryptocurrencies for investment and payment.

• The rise of local platforms:

• MercadoBitcoin: MercadoBitcoin is the largest local cryptocurrency exchange in Brazil, and its market share will increase significantly in 2024. MercadoBitcoin offers a variety of cryptocurrency trading pairs and continues to improve in user experience and security. In 2024, MercadoBitcoin's trading volume doubled, mainly due to its payment institution license from the Central Bank of Brazil and its expanding cryptocurrency product line.

• Localization Advantage: Local exchanges have won the trust and support of a large number of users by providing services that are more in line with the needs of Brazilian users, such as local payment methods, low transaction fees and 24-hour customer support.

• Policy and Regulatory Environment:

• The Brazilian government has an open attitude towards cryptocurrencies and actively promotes relevant legal and regulatory frameworks. The "Legal Framework for Crypto Assets" adopted in 2021 provides a clear legal basis for the cryptocurrency market and promotes the healthy development of the market.

• The Central Bank of Brazil is also actively exploring and promoting central bank digital currencies (CBDCs), hoping to improve the efficiency and inclusiveness of the financial system through CBDCs.

• Participation of traditional financial institutions:

• Large financial institutions in Brazil, such as Itau Unibanco and Banco Bradesco, are actively involved in the cryptocurrency market and have launched trading and custody services for Bitcoin and Ethereum. The participation of these traditional financial institutions has not only increased the depth and breadth of the market, but also enhanced users' trust in cryptocurrencies.

Mexican and Argentine Markets

Mexico and Argentina are two other important countries in the Latin American cryptocurrency market, and their market conditions are unique.

2. Mexican Market:

• Exchange-dominated: Mexico's cryptocurrency market is dominated by local exchange Bitso. Bitso has a 99.5% market share in the Mexican market and is the country's most popular cryptocurrency trading platform. Bitso has attracted a large number of users by providing localized payment solutions and low transaction fees.

  
  

• Market Growth: Mexico's cryptocurrency trading volume will grow steadily in 2024, but it will still be lower than Brazil's trading volume. Mexican users are mainly concentrated on the trading of mainstream cryptocurrencies such as USDT and Bitcoin.

• Policy and regulation: The Mexican government's regulation of cryptocurrencies has gradually improved, and a law was passed in 2023 requiring all cryptocurrency exchanges to register. This move will help regulate the market and protect the interests of investors.

  
  

3. Argentine market:

• Driven by high inflation: Argentina's cryptocurrency market growth is mainly driven by high inflation and currency depreciation. In 2024, Argentina's inflation rate exceeded 200%, causing a large number of residents to convert part of their assets into cryptocurrencies to counter the depreciation of their own currency.

• Trading Volume and Market Share: Argentina’s cryptocurrency trading volume has grown significantly in 2024, increasing by more than 400% between January and May. Argentine users are mainly focused on trading Bitcoin and stablecoins such as USDT.

• The Role of Local Exchanges: Although Binance and other international exchanges have a presence in the Argentine market, local exchange Bitso is also gradually expanding its influence, especially in Bitcoin and stablecoin trading in Argentina.

  
  

Overall, Brazil, Mexico, and Argentina each have their own characteristics in the Latin American cryptocurrency market. Brazil is in the lead with its strong market growth and the rise of local platforms; Mexico is steadily developing through the dominance of local exchange Bitso; while Argentina’s cryptocurrency market is rapidly expanding, driven by high inflation and currency depreciation. In the future, as the policies and market environment of various countries are further improved, these markets are expected to continue to grow and show greater development potential.

VI. Future Outlook

Based on the above analysis, Aiying believes that the Latin American cryptocurrency market will usher in more significant development in the next few years:

• The market size will continue to expand:

• With the support of policies and the advancement of technology, the size of the Latin American cryptocurrency market is expected to continue to expand in the next few years. Countries such as Brazil, Mexico and Argentina will continue to play an important role in driving market growth throughout the region.

• The dominance of stablecoins and Bitcoin will continue:

• Stablecoins will continue to occupy an important position in transactions, especially in countries with high inflation. At the same time, Bitcoin's position as a store of value and investment tool will become more solid, attracting more users and investors.

• The competitive advantages of local exchanges will be enhanced:

• Local exchanges such as Bitso and MercadoBitcoin will further consolidate their market position and continue to attract and retain users with localized services and flexible operating strategies. At the same time, international exchanges such as Binance need to pay more attention to local market needs to cope with competitive pressure.

• Financial inclusion will be improved:

• The popularity of cryptocurrency will significantly improve financial inclusion in Latin America, especially for those who do not have bank accounts. Through cryptocurrency, these people will be able to participate in economic activities more conveniently and improve their economic conditions.

Overall, the Latin American cryptocurrency market will show strong growth momentum and broad development prospects in the next few years. Whether it is the improvement of the policy environment or the drive of technological innovation, Latin America is expected to become an important part of the global cryptocurrency market, showing great potential and vitality. Aiying will also continue to pay attention.

References:

1. "LATAM Market Report", Kaiko, June 2024.

2. Kaiko official website, research.kaiko.com

3. Brazil Central Bank official website, www.bcb.gov.br

4. Salvador government official website, www.presidencia.gob.sv

5. Bitso exchange official website, www.bitso.com

6. MercadoBitcoin exchange official website, www.mercadobitcoin.com.br

7. Binance exchange official website, www.binance.com

8. “El Salvador adopts Bitcoin as legal tender”, BBC News, www.bbc.com

9. Bitso exchange official website, www.bitso.com

10. MercadoBitcoin exchange official website, www.mercadobitcoin.com.br

11. Binance exchange official website, www.binance.com

12. “El Salvador adopts Bitcoin as legal tender”, BBC News, www.bbc.com Brazil’s Crypto Regulation: A Legal Framework for the Future, CoinDesk, www.coindesk.com Argentina’s Inflation Crisis and Cryptocurrency Adoption, Forbes, www.forbes.com