The demand for cryptocurrency in certain countries is growing amid the COVID-19 pandemic. Bitcoin (BTC) peer-to-peer trading volume in Argentina, Chile, Venezuela and Morocco has peaked over the past few weeks, marking new all-time highs.

Additional reports suggest that traffic on centralized cryptocurrency exchanges has also peaked within the past few weeks, while major trading platforms such as Kraken and Coinbase have commenced hiring sprees due to increased customer interest. So, why exactly are people trading more crypto during the global lockdown, and where is this trend most apparent?

COVID-19 triggered a massive selldown

Like perhaps any other industry out there, the cryptocurrency market has been affected by the pandemic. However, the effects the virus has had on the sector are not entirely negative. While the price of Bitcoin plunged in March, it has since bounced back to its pre-crash levels. It is typical in a financial crisis to see some assets rise and fall during a short period of time, as Jeff Dorman, the chief investment officer of the crypto-oriented investment management firm Arca, told Cointelegraph:

"During the first few weeks of a financial crisis, either liquidity or solvency-based, investors generally rush to sell everything they don't really believe in. The next few weeks are spent buying whatever you do believe in. The rest of the time is sitting around waiting for your decisions to pan out and for clarity to improve."

Further, the virus has somewhat paradoxically offered more opportunities for crypto companies such as the United States-based exchange Kraken, which has recently added an extra 100 job openings in the wake of apparently elevated customer interest. “The traditional system seems to be completely breaking down all over the world,” Jesse Powell, the co-founder and CEO of Kraken, explained: “Increased customer demand is going to mean increased business for us, and it's going to mean increased hiring.”

San Francisco-headquartered Coinbase is also hiring dozens across its offices in the U.S., Europe and Asia. The company is apparently “full steam ahead,” executing on its 2020 strategy despite the looming economic crisis, as announced last month by the company’s CEO, Brian Armstrong. According to Armstrong, whose company reportedly saw as much as $1.3 billion in fiat and cryptocurrencies deposited into its wallets in just one day amid the March market crash, crypto might be the key component of a post-COVID-19 financial system.

But it wasn’t just Coinbase that saw gigantic volumes come in on March 12, the day Bitcoin’s price fell by nearly 50% during the event that has since been dubbed “Black Thursday” by the community. During the peak hours of the sell-off, Bitfinex was handling up to $11.8 million worth of trades per minute, according to a press release the company sent to Cointelegraph. Kim Grauer, the head of research at the blockchain and crypto analytics firm Chainalysis, echoed the sentiment, telling Cointelegraph that “cryptocurrency exchanges experienced their largest ever Bitcoin inflows,” adding:

“9x the daily average amount of Bitcoin was sent to exchanges to be sold from March 12 to March 13. This selling pressure led to a ~37% fall in price. Price pressures have since eased.”

According to Chainalysis data provided to Cointelegraph, the total on-chain activity across all assets during the week of March 15 amounted to as much as $44 billion, although the volume has normalized during April. Exchange trading volumes reached a “several year high” during the initial sell-off as the collapse in prices spurred activity, John Todaro, the head of research at TradeBlock, confirmed in an email conversation with Cointelegraph:

“This was seen throughout markets as U.S. investment bank trading desks saw some of the highest volumes in years. Since early March, exchange trading activity has fallen some as prices have stabilized.”

Dollarization is one of the current trends

Stablecoins represent a particularly popular kind of asset during these times, Todaro told Cointelegraph: “One area within digital currency markets that has seen growth in trading volumes are stablecoins, which likely were in high demand as they effectively offered USD-equivalent exposure.”

“We have seen a move to stablecoins in the past month or two,” Grauer confirmed, elaborating that the U.S. dollar is still deemed more reliable than Bitcoin, despite all the recent criticism of Federal Reserve money printing:

“We think that the stability of the USD is attractive and considered to be a more stable investment. If we do end up seeing a systematic move to Bitcoin during times of uncertainty, I think this would be further evidence that it is also considered a reliable store of value, or at least more reliable than available alternatives.”

If anything, the U.S. dollar has become even more popular, Jack Purdy, an analyst at the crypto research firm Messari, told Cointelegraph: “The biggest trend has been dollarization that we've been seeing in traditional markets and has made its way into crypto.”

Developing and challenged countries may be more reliant on crypto

But are people actually trading more crypto during the lockdown? It might be true in some countries such as Russia, where traffic on crypto exchanges reportedly surged 5.56% during the last week of March compared to February averages. Notably, the increased traffic numbers coincided with Russia’s first paid nonworking week, which was scheduled from March 28 through April 5 to mitigate the coronavirus outbreak.

However, there seems to be no data for centralized crypto exchanges in other countries, which makes it practically impossible to confirm the trend. The above-mentioned data from Coinbase and other exchanges seems to indicate that people were actively trading because of the price drop on Black Thursday, not due to the coronavirus outbreak.

The situation seems different in developing countries. Numbers obtained from LocalBitcoins, a popular peer-to-peer Bitcoin trading platform, seem to indicate that Bitcoin trade volume recently scored an all-time high in countries such as Argentina, Morocco and Venezuela.

Specifically, LocalBitcoins volume in Chile reached a new record of over 330 million Chilean pesos during the week ending on April 4, while in Argentina the weekly volume of Bitcoin purchased with local currency has soared 1,028% since January 2018. Venezuela also just witnessed a new record, as Bitcoin weekly volume there constituted over 722 billion Venezuelan bolivars for the week ending April 25. It’s not just Latin America, however, as peer-to-peer Bitcoin trading in Morocco also reached a record-breaking volume at the start of April.

All of those countries have one thing in common: unstable or challenged economies. Venezuela is mired in political and economic instability, with the country’s leader, Nicolas Maduro, apparently failing to launch a national cryptocurrency. Argentina faces a possible default on $65 billion in foreign debt, while Chile, despite being reportedly one of the richest countries in the South America region, is also seeing its economy being weakened by a lockdown enforced in the country. Finally, the Moroccan economy is expected to lose $2.89 billion in the first half of 2020 due to the pandemic. Todaro believes that people in some countries are turning to digital currencies for a good reason:

“In countries with political instability, a global pandemic such as COVID-19 could have significant lasting effects. Perhaps it could spur changes in local and national governments.”

Indeed, Bitcoin’s safe haven narrative has been performing best in countries such as Venezuela, where the local currency is inflating so fast that people are forced to spend their paychecks on the same day that they receive them — otherwise, they simply miss the opportunity to buy enough food. Bitcoin, on the other hand, proves to be a much more stable asset even despite its infamous volatility. Even if the price goes down, it is hardly going to be as dramatic as the 10,000,000% inflation rate that Venezuela had to endure last year.

“In countries experiencing political instability (some in Latin America, Africa, and others) there seems to be a growing acceptance of Bitcoin and digital currencies more broadly,” Todaro told Cointelegraph. Grauer, however, is not yet drawing any concrete conclusions. According to her, the LocalBitcoins data might not be enough to prove a point:

“There are certainly other interesting trends worth exploring in the Local Bitcoins trading data, but before we can draw conclusions as to whether people are systematically turning to crypto in times of uncertainty would require looking at all the data together first. We are working on our own analysis on this over the next couple of months.”

It is indeed worth noting that LocalBitcoins data only shows volume for Bitcoin trade, while dollar-pegged stablecoins should be particularly valuable in developing economies, as noted above. On the other hand, it might be difficult to trade crypto online in countries such as Venezuela where local exchanges trading Bitcoin, Ether (ETH) and other popular cryptocurrencies and stablecoins are almost nonexistent.

Related: Venezuela President Maduro Is Not Pro-Crypto, He Just Likes Petro

Either way, crypto is popular

Even regardless of the trade volume, crypto has remained popular as a concept during the COVID-19 outbreak, according to data provided by the analytics and finance management startup The Tie. “Since the beginning of the year Bitcoin’s 30 day average tweet volume has increased by 16.5%,” the firm’s CEO, Joshua Frank, told Cointelegraph.

While the number of Bitcoin conversations on Twitter saw a decrease after Black Thursday, it has picked up pace due to the upcoming halving event, according to Frank. As a result, “Bitcoin sentiment is actually approaching the highest level we have seen in 2020.”