Instability stemming from an apparent coup could send the bitcoin price even higher in Zimbabwe.
On Wednesday, Zimbabwe’s military initiated an apparent coup 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.
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 nascent bitcoin markets.
As CCN has reported, the bitcoin price already trades at an astronomical premium in Zimbabwe, primarily due to an extreme cash shortage and tight capital controls implemented to keep physical currency within the country. Although the country nominally uses the U.S. dollar as its official currency, the lack of physical dollars caused the government to print bond notes supposedly pegged to dollars at a one-to-one ratio.
However, it’s an open secret that the government has been inflating the “zollar” supply at a pace far above the official, dollar-denominated rate of 0.38%. Consequently, Reuters reports that residents have been pouring their money into any value-retaining asset they can find — including bitcoin.