Argentina is facing soaring inflation and a plummeting peso, with domestic asset prices taking a severe hit. The United States has pledged financial assistance, but Bitcoin advocates question whether it will bring about any change.
Last week, the peso fell by about 4.5%, as investors doubted President Javier Milei's ability to implement fiscal and structural reforms after his party's electoral defeat earlier this month in the Buenos Aires province. Corruption investigations involving members of the Milei family exacerbated the sell-off, further deepening political uncertainty.
Investor unease has led to a massive outflow of funds from the Argentine market. According to Bloomberg data, the central bank used about $1.1 billion in three days to defend the peso, while the country holds only about $20 billion in liquid foreign exchange reserves, a substantial amount.
Prices of Argentine dollar bonds also fell due to concerns that the Milei government is consuming cash at an unsustainable rate.
Amid the turmoil, U.S. Treasury Secretary Scott Bessent stated on Monday that Washington views Argentina as a "systemically important ally" in Latin America and announced that "all possible stabilization measures are on the table."
Bessent mentioned that the measures under discussion include currency swap lines, direct currency purchases, and using the Treasury's foreign exchange stabilization fund to buy Argentine government bonds.
Bessent's remarks temporarily restored investor confidence. The Financial Times reported that the Argentine Merval stock index rose by more than 9% in dollar terms on Monday, although it is still down about 49% for the year. Dollar bonds also saw a significant rebound.
Javier Milei has been a controversial figure during his presidency. As reported by Cointelegraph, his support for LIBRA—a controversial cryptocurrency project accused of a pump-and-dump scheme—triggered a federal investigation, although Milei later disbanded the task force responsible for the case.
Since taking office, Javier Milei has failed to improve Argentina's fiscal situation. Economist Saifedean Ammous, author of "The Bitcoin Standard," believes that Milei has actually exacerbated the country's plight through a so-called "Ponzi scheme of debt and inflation," which is now coming to an end.
Ammous criticized Milei for failing to control inflation, noting that the Treasury only successfully sold its latest batch of bonds after raising the annual interest rate to 88%. He also accused the government of promoting liberalism while significantly expanding the money supply.
On Friday, Ammous reiterated that the peso has been in freefall since Milei took office.
Although the peso operates within a managed floating range—fluctuating between 948 and 1475 against the dollar—the uncertainty surrounding the elections has prompted Argentines to seek stronger alternatives, particularly dollar-pegged stablecoins.
Ignacio Gimenez, business manager at the Lemon crypto trading platform, told Cointelegraph, "Election uncertainty has led Argentines to seek stronger currencies beyond the peso, such as dollar stablecoins."
Gimenez pointed out that September 14 was the platform's highest day for stablecoin purchases since 2024 began.
He added, "From mid-August to now, as the dollar began to rise, we noticed that stablecoin sales have exceeded purchases, with the exception of the election peak. This indicates that as the dollar rises, many Argentines are now choosing to sell coins for pesos."
When asked about Milei's economic reforms and their impact on cryptocurrency adoption, Gimenez stated that the government's fiscal adjustments are still ongoing, and it is too early to judge the results. However, it is certain that Argentines continue to view stablecoins as a real-time hedge against domestic political and economic uncertainty.
In Argentina, stablecoins are not only used to hedge against currency depreciation but are also widely applied in international payments, remittances, and accessing decentralized financial services.
Bitcoin (BTC) is also gradually becoming a store of value. Since 2024, as the exchange rate stabilizes and inflation decreases, Bitcoin's appeal has continued to rise, in some cases even surpassing that of the dollar. Gimenez noted, "Currently, the number of Argentines holding Bitcoin on the Lemon platform has exceeded those holding dollar stablecoins."
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Original article: “Peso in Freefall — U.S. Aid to Argentina Questioned by Bitcoin (BTC) Supporters”
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