Bitwise CEO Proposes Bitcoin Solution After Iranian Protests Over Currency Collapse

Highlights:

• Protests have hit Tehran due to the rising prices for basic goods and currency depreciation.
• Bitwise CEO Hunter Horsley said Bitcoin can protect people from falling currency value.
• Iran is facing banking strain and unlicensed crypto mining, which threatens economic stability.

Demonstrations shook Tehran as the Iranian rial plunged to unprecedented levels against the US dollar. The free market exchange rate was about 1.4 million rials per dollar, which significantly decreased the purchasing power of households. As the unrest continued to play out, Bitwise CEO Hunter Horsley commented that Bitcoin can act as a hedge in case national currencies are devalued.

Traders and consumers have complained because the cost of food, fuel, and imported commodities has gone up. Protestors assembled in business centers and proceeded to the Grand Bazaar in Tehran. The currency meltdown has wiped out household savings and added to inflationary pressure. The families could hardly afford basic living conditions because the prices were increasing nearly every day. The increasing prices became the source of the mass unrest and escalated demonstrations.

The inflation is over 40% per annum, which further diminishes the purchasing power of citizens. Gold coins, which are a commonly used hedge, hit record prices as residents attempted to save wealth. Existing sanctions restricted foreign currency and international banking networks. The rial has further been undermined by importation prohibitions and decreasing oil earnings. Such pressures put households in uncertainty about their financial future.

The government is under increasing pressure as demonstrations sweep through the capital. The resignation of Central Bank Governor Mohammad Reza Farzin during the unrest created more doubt. The government has been monitoring markets and demonstrations as it attempts to maintain public confidence. Citizens have expressed frustration over rising costs, shrinking savings, and unstable financial systems.

Crypto Market Declines Amid Bitwise CEO Remarks

Iran also experienced a significant market decline this year in its crypto market. Monetary and geopolitical shocks slowed trading, with flows dropping to $3.7 billion in the first half. This decline was an 11% downturn in comparison with the previous year. The largest declines occurred in June and July during a 12-day conflict with Israel and stalled nuclear talks.

The downturn added stress to households trying to protect their wealth amid inflation. Citizens increasingly considered digital assets as the rial weakened. Hunter Horsley has emphasized that Bitcoin could protect value when national currencies fail.

History reveals the extent of the Iranian currency meltdown. The official rate in the early 1980s was about 70 rials per dollar. The current rates are a product of a decades-long depreciation and mismanagement of the economy. Analysts have observed that when the devaluation is rampant, citizens tend to find alternative stores of value. Bitcoin is an alternative that could be used by individuals who want financial security.

Banking Strain and Crypto Restrictions Add to Uncertainty

The effect of the economic pressure has spilled over into the banking system of Iran. The bankruptcy of state-owned Bank Melli threatened the holdings of over 42 million accounts. Past warnings showed that some banks were under threat of either dissolution or consolidation.

Illegal crypto mining has further added to the economic challenges. Authorities disclosed that approximately 95% of the 427,000 mining machines in the country are unlicensed. This has brought serious concerns regarding the stability of the national power grid. The government has put a crackdown on unregistered mining, citing strain on electricity and compliance.

Further tension followed a major hack of the Iranian Nobitex exchange, which suffered losses amounting to $81 million. In the subsequent months, crypto transaction flows declined due to renewed tensions in the region. Households are still experiencing the effect because the prices of basic commodities such as chicken, dairy, and beans have soared.