The recent military takeover of the capital of Zimbabwe – which generals insist is not a coup – has seen a surge in demand for Bitcoin currency amid a shortage of hard currency.
On Wednesday, Zimbabwe’s military initiated a take over against President Robert Mugabe, the authoritarian leader who has ruled the country for nearly 40 years. Although the military denies it is attempting to overthrow the regime, the 93-year-old president has reportedly been taken into custody, throwing the country’s political future into turmoil.
Zimbabwe has seen hyperinflation which has led to $1 being worth 35 quadrillion Zimbabwean dollars. The relative security of cryptocurrency already came at a premium.
Bitcoin prices have risen 10% to $13,499 on Golix, the nation’s only cryptocurrency exchange, since the take over. That figure is nearly twice the $7,000 Bitcoin price on U.S.-based exchanges such as Bitfinex.
During times of crisis, people often turn to hard assets such as gold to preserve their wealth. Recently, bitcoin and other cryptocurrencies have begun to eat into gold’s market share, and it would not be surprising if this coup leads more Zimbabweans into the country’s newly emerging bitcoin markets.
The surge has been fueled by Zimbabwean investors seeking a safe haven from domestic banks amid the country’s ongoing political, financial and monetary problems. While Zimbabwe once had its own currency, it began using a mix of currencies from stable economies including the U.S. dollar and the South African rand in 2009 after hyperinflation made its own note almost worthless.
But, as the country’s political situation has worsened, Zimbabweans have continued to hoard and store money 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.
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.
If the apparent coup destabilizes the country, the bitcoin price could rise even higher in Zimbabwe. Conversely, if the new regime adopts a less-inflationary monetary policy, it would not be surprising to see the bitcoin price fall closer to the global average.