Bitcoin's surge, approaching 10% increase against the Mexican Peso, has brought attention back towards
'Trump trades', with the Mexican Peso undergoing several fluctuations ahead of the US election. In response to political uncertainty, investors are increasingly focused on the Mexican Peso, leading to a drop against the US dollar. This comes alongside the growing popularity of crypto exchanges in Mexico, with
Binance and
Bitso making significant moves in the market.
The value of the Mexican Peso has taken wild turns, breaking through the 20-per-dollar barrier but also slipping to 14-day lows. Despite these fluctuations, the liquidity of the Mexican Peso and its potential for recovery, based on a wide interest-rate differential, have drawn attention. Meanwhile, the Mexican government is engaging deeper with cryptocurrencies; with the launch of
MXNā® Tether tokens pegged to the Mexican Peso and
Circle introducing USDC in Mexico.
The
crypto market in Mexico is growing quickly, with new payment solutions by Bitso and Circle, along with the introduction of new stablecoins by Tether. Crypto adoption is on the rise, with about 2.5% of the Mexican population now owning cryptocurrencies. The Mexican central bank has also made moves to modernize its currency, introducing new 20 and 50-peso notes.
However, amid this growth, concerns are also arising. The Mexican Peso has recently slumped to a record low since the Federal cut, causing unease among investors. There are also fears of unknown geopolitical risks and increased risk aversion in USD/MXN trading. Furthermore, while government-backed cryptocurrencies have some suspicious, regulations in Mexican crypto by 2024 will be critical to the ecosystem's development.
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