The price of Bitcoin (BTC) in Lebanon on the peer to peer exchange Localbitcoins has surged 30-50% above the global average spot price, with prices approaching $15,000 per Bitcoin (BTC).
This is due to a currency crisis in Lebanon. The Lebanese Pound (LBP) is supposed to be pegged at a ratio of 1,507 LBP per USD, but that peg broke in the past year and now the LBP has devalued 40% on the black market.
Simultaneously, there has been a run on the banks, so bank reserves have declined sharply. This run on the banks is likely due to rumors that all bank deposits will get a ‘haircut’, where 30-60% of deposits will be seized by the government. Indeed, the government is facing heavy bond repayments in the next few months, and these repayments could cause the country to become insolvent.
In order to stifle the bank run, withdraw limits have been lowered to $300, which has only made the situation more frantic since anyone with savings has no choice but to watch their LBP deposits lose value due to inflation while only being able to take out a little bit of money at a time.
Since banks and the local fiat currency are in such dire straits, it makes complete sense that Lebanese citizens are turning to Bitcoin (BTC), since Bitcoin (BTC) is decentralized and can never be frozen or seized by the government. Also, Bitcoin (BTC) has generally been gaining value long term, unlike the LBP which can only go down from here.