In the backdrop of an economical crackdown in Iran, Bitcoin prices are experiencing a sharp upturn. Soon after the announcement regarding the approvals of mainstream bitcoin mining by the government of President Hassan Rouhani, on Wednesday, the local currency nosedived and Bitcoin prices shot up.
Currently, the world’s most expensive bitcoin core (BTC) price is in Iran. On the Iranian exchange EXIR, Bitcoin hit a world record $24,000, eclipsing its previous high of $20,000 as investors trust the digital token over their falling national currency Rail. The Exchange Tweeted:
“bitcoin bull markets already started in Iran as rial price goes down against USD.”
The bullish market is accredited due to a combination of high foreign currency demand, economic sanctions, and an improved regulatory environment. According to a Reuters report, the Rail is trading at around 138,000 against the US dollar on the streets of Tehran, which is about 230 percent above the official rate of around 42,000.
Iran officiates Cryptocurrency Mining
Iran officials announced on Tuesday, that The Central Bank of Iran, which oversees foreign exchange and monetary policy, will draft a policy framework for the mining of bitcoin and other cryptocurrencies for it to be recognized as an ‘Industry’, within three weeks.
Abolhassan Firouzabadi, The Secretary of Iran’s Supreme Council of Cyberspace, told IBENA, that strengthening the cryptocurrency trade between Tehran and its partners is a potent step towards a better future especially in the wake of renewed US sanctions. IBENA is a specialized news agency in banking and economy which is affiliated to the Central Bank of Iran. According to the report, Firouzabadi stated that mining of cryptocurrencies like Bitcoin had “been accepted as an industry in the government and all related organizations..”
Why the Price hike?
The Iranian bitcoin price broadly reflects the gap between the official exchange rate and the one on the street, implying to the inflationary pressures building up in an economy under US sanctions. In Iran, Bitcoin is trading at a premium of about 240 percent to the global average at $24,000. At the present time, bitcoin is quotes at $7,017, by Coinmarketcap.com.
According to a tweet by the EXIR, BTC prices in Iran has soared about 40 percent in the last three weeks, rising much faster than the global average. This can be attributed to the declining rial,changes in bitcoin policy, and some speculation doing the rounds.
The recent shift in the U.S. sanctions has a lot of countries grappling for survival. Iran is the world’s third-largest oil producer within OPEC after Saudi Arabia and Iraq and the newly imposed sanctions for Iran are designed to cut oil sales from the country essentially cutting the economy’s lifeblood. To combat the same, the Middle East country is hoping to turn towards the digital assets to compensate for the expected squeeze in petrodollars.
In February, Venezuela issued a digital currency of its own called the Petro, which is claimed to be backed by oil. The US government responded to the same by banning its citizens from investing in the petro. On the flip side, Petro is looked upon more as a scam than a solution. A recent report suggests that the Venezuelan Cryptocurrency Has No Users, No Investors and No Oil to Back It Up.
While Venezuela’s doesn’t seem to get the hang using Crypto to overcome their economic crises, can we expect Iran to a better and sincere attempt at it?