On a rainy Tuesday afternoon, the day before bitcoin hit an 18-month low, 30-year-old Elisa Caletti walked into the Bitcoin Embassy in Mexico City’s Roma Norte neighborhood. The “embassy” — a crypto-themed bar, not a diplomatic institution — is home to one of the few bitcoin-compatible ATMs in the area. Even with bitcoin’s plummet, Caletti wasn’t there to withdraw all her funds. She’s hodling.

“There are always dips,” Caletti told Rest of World. “You’re not always going to be at the top.” She used the ATM to take out some cash and left the bar, waiting for a rideshare outside, next to a chalkboard drawing of an astronaut emblazoned with a Bitcoin symbol straddling a rocket, Dr. Strangelove–style. “See you in the moon,” read the caption below in English.

Since November, the market cap of all cryptocurrencies has dropped 66%. While speculation-minded investors have watched its fall with horror from the United States, the response in Latin America, where cryptocurrency has increased its foothold over the last two years, is more mixed. The risky assets offer a unique value proposition for the region, which has long been plagued by unstable economies and closed capital markets. Crypto entrepreneurs and enthusiasts accustomed to volatility or exclusion are taking a more sanguine view of the crash.

“Other countries take these bear markets as a big tragedy,” said Carlos Mijares, a 25-year-old freelance graphic designer and crypto user from Caracas. “We see and live an economy from resilience.”

Omid Malekan, a crypto expert and adjunct professor at Columbia Business School, said that the panicked response to the crash from the U.S. ignores the variety of local realities across much of the world where people do not have access to the U.S. dollar and stable banking systems. “When a lot of the experts, academics, and people like Warren Buffett in the United States criticize crypto and Bitcoin, they do often seem to come at it from a very — for lack of a better word — privileged position.” 

At the end of 2021, Bitcoin was booming, along with cryptocurrency-powered projects across Latin America. Mexico claimed the region’s first crypto unicorn with the exchange Bitso, in May 2021. El Salvador became the first country to adopt bitcoin as legal tender (to limited success), in September 2021. Venezuela, Argentina, Colombia, and Brazil all appeared among the top 15 countries ranked by crypto adoption in the analysis firm Chainalysis’s 2021 global index. 

As the Venezuelan economist Aarón Olmos of the Institute of Higher Administrative Studies (IESA) told Rest of World, people in Latin America began turning to crypto as a way to circumvent their unstable or stagnant economies.  He said that in surveys he ran with crypto users in Venezuela, the most common response was, “I would rather have a digital asset whose price goes up and down than a currency whose only real trend is down, thanks to the political economy.”

Venezuela and Argentina, both of which suffer from high inflation, offered particularly robust testing grounds as financial ecosystems where crypto may be more attractive than the government fiat. One Venezuelan private investor and crypto user, who spoke on condition of anonymity because discussion of his personal financial opinions could threaten his job, described crypto as “the best available option so far,” given the instability of the bolívar and the local dearth of U.S. dollars. Venezuela’s annual inflation rate hit 686.4% in 2021. 

That’s not to say that Latin American investors are unscathed. With the recent collapse of high-profile project Terra and the shakiness surrounding Celsius, crypto has fallen back to earth, affecting traders, companies, and governments alike. Bitso laid off more than 10% of its employees, the Argentine exchange Buenbit laid off 45% of its staff, and the presidential administration of Nayib Bukele in El Salvador has lost an estimated $50 million of its investment in bitcoin.  

Five traders who turned to risky projects, like Terra and Anchor protocol — which offered too-good-to-be-true interest rates — told Rest of World that they lost a large portion or all of their savings.

“What’s happening in Latin America is that there’s a survival of the fittest.”

Yeibert Godoy, 26, lives in Caracas and started working for a bitcoin mining company in Venezuela during the pandemic. He receives his salary in Tether, a stablecoin tied one to one with the U.S. dollar. Even though Tether has maintained its value during the crash, he watched the collapse of other cryptocurrencies — and especially TerraUSD (UST) — with trepidation. 

“I confess that the fall of UST awakened some distrust in me,” he told Rest of World. “There is a possibility that at some point [even stablecoins] will no longer function as a store of value to protect against crypto market volatility.”

The crash has also highlighted the internal divisions within the crypto community between libertarian ideologues, pragmatic savers, and sometimes entrepreneurial scammers. 

Roberto Conte, a Mexican entrepreneur currently working on a Bitcoin lending tool called Kuze, described the doomed Terra as a “Rube Goldberg machine of nonsense.” He said that despite the clear risks, people in precarious financial positions are liable to fall for untested projects. “They’re still trying to survive any way they can,” he said. He predicted that the recent volatility — and massive losses — will turn people away. “Adoption will backtrack,” he said, “but it will teach a lot of people about money and investment.”

Lorena Ortiz, the director of Mexico City’s Bitcoin Embassy, acknowledged the anguish people were going through but blamed the losses on a lack of financial education. “The problem is that often scarcity and ignorance push people to Ponzi schemes and scams with the promise of making a lot of money faster and effortlessly,” she said.

For Ortiz, who first got into crypto in 2017, Bitcoin is about more than price — it represents a form of financial autonomy that assets trending toward devaluation like the Mexican peso do not. 

Leo Schwartz/Rest of World

Some traders in Argentina, where the government just announced a monthly inflation rate of 5.1%, and an annual rate projected to top 70%, told Rest of World that Bitcoin is still the more stable choice.

“If you’re from Argentina, holding bitcoin now is better than having pesos,” Federico Sánchez, the director of the Argentine crypto exchange called Kripton Market, told Rest of World. The exchange is located in a Buenos Aires coworking and event space called Espacio Bitcoin, which is dedicated to cryptocurrency and located just a few blocks away from the city’s financial district. Sánchez sees the current crash as an opportunity for projects like his to prove themselves after months of rampant growth. “A fall in the market means that speculators are going away: it’s the perfect time to create,” he told Rest of World

Columbia University’s Malekan said that in Latin America, the value proposition for cryptocurrency as an alternative economic infrastructure will outlive the crash. “That trend will continue, regardless of what the prices do,” he said. 

Conte, the Mexican crypto entrepreneur, was more blunt. “What’s happening in Latin America is that there’s a survival of the fittest,” he said. “The fittest are those who understand the value of long-term thinking and stability.”

Argentinian trader Elmer Curio, who is 19, feels similarly. He started putting his money into Terra because it offered the best monthly interest rate. When the currency collapsed, he lost all his savings — $166. “I felt really bad for a few days, but it hasn’t changed my mind,” he told Rest of World. “I just need to be more careful how to invest my money.”

Others were less optimistic. One Venezuelan father of two who said that he had lost most of his savings in the crash, declined to share details of his situation with Rest of World for fear of further hurting his family.