The last several weeks have brought meaningful weakness so the currency of several emerging market countries. Nations like Venezuela, Argentina, Brazil, India, and of course Turkey, have seen the value of their native money plummet versus the US dollar.
Of course, when these things happen, the conquences are often felt by individuals in the country who see the purchasing power of their hard earned money evaporate in real time. Venezuelan inflation was projected by the IMF to hit 1,000,000 percent by the end of 2018.
What often results in the face of such a staggering devaluation of the currency is pain, confusion, and unrest among the population.
Unfortunately, these folks are some of the more vulnerable the world has to offer, and the very folks that need economic security the most.
In the end, people do what they always do and they try to solve the problem as best they can to try and bring some stability to their economic lives.
Increasingly, we could see countries in this situation turn to alternative digital currencies like bitcoin. Is that the right decision? Only time will tell.
However, when your own currency's value is vaporizing and taking your ability to buy basic supplies with it, it seems like a much safer bet.
As we review search data in places that have currencies that have struggled recently, we see more and more interest in bitcoin and other crytocurrencies. This type of demand could gain momentum, and drive new waves of interest and adoption for bitcoin as 2018 comes to a close.
Graphing Google search volume by country, and comparing it to the United States demonstrates the phenomenon. Throughout 2018, search demand for the term 'bitcoin' has been higher, and even rising lately, in places like Ghana and Iran. These developing markets are far outpacing the US on searches for bitcoin.
data from trends.google visual by Jason Pfaff
Even a large emerging market like India is following the pattern. The USDINR pair has weakend to above 70.00, which is an all time high. While inflation has yet to spiral there, the currency is weaker than it has ever been and purchasing power has been eroded at a surprisingly rapid rate.
As the chart below shows, as the USDINR pair has moved higher, bitcoins being purchased with Rupee's has grown at a similar rate.
data from bitcoinity and trends.google visual and analysis by Jason Pfaff
None of us can ever forget the meteoric rise bitcoin experienced last fall.
In fact, it was right around this time last year that bitcoin was on the launch pad ready to rocket above 19,000. Before it was said and done, everyone was talking about bitcoin, from morning show hosts to grandmothers to rap stars.
And while no one can predict if and when that could ever happen again, it is fair to suggest the next wave of demand might come from some places we might not expect.
How much a surge of demand from different corners of the globe can actually move the price of bitcoin is hard to quantify, but the reasons it may happen make sense and could tell us more about the future of crypto than we probably realize.