In Argentina, the election of outspoken libertarian Javier Milei as president is setting the stage for potential ripple effects throughout the world of traditional finance and cryptocurrencies.
After Milei’s successful attempt to become the leader of South America’s second-largest economy was confirmed on Sunday, the price of bitcoin soared to its highest level in more than a year and a half and almost reached 38,000 Dollars. The unorthodox politician has heralded Bitcoin as “the return of money to its original creator: the private sector.”
All eyes are now on what could lie ahead for cryptocurrencies in the country, given Milei’s stances on monetary policy and the Argentine peso’s serious problems with hyperinflation and devaluation.
“His presidency could pave the way for greater acceptance and integration of cryptocurrencies in the Argentine economy, offering a potential solution to the long-standing problems of inflation and financial instability,” according to Grayscale Research.
In a note on Monday, Grayscale described Argentina’s monetary struggles, highlighting hyperinflation in consumer prices that has reached 143%.
Identifying as an anarcho-capitalist, ““Milei sees Bitcoin as a crucial tool to counter the inefficiencies and corruptions of centralized financial systems,” Grayscale said, adding that some of the newly elected president’s supporters “see Bitcoin as a viable alternative to traditional economic structures.”
Weight replacement
CoinShares research analyst Max Shannon said bitcoin could eventually replace the peso if the fiat currency collapses due to reform or hyperinflation.
“Milei is in favor of dollarization and Bitcoin. Dollarization occurs when a significant part of the economy operates in foreign currencies, either officially or unofficially,” he stated. “This provides much-needed price stability and restores confidence in economic transactions and asset valuations.”
In terms of price and overall adoption, some believe that Bitcoin will gain substantially if Milei manages to encourage broader adoption of the digital currency.
“Milei’s victory is a positive factor for the BTC price in the long term,” said Ruslan Lienkha, head of markets at YouHodler. ““The use of cryptocurrencies will be much broader in this country over time, if Milei resists the current serious economic problems and does not lose its position.”
Although some Argentines have embraced digital currencies in the face of the peso’s perpetual loss of value and rising inflation, many citizens still choose to trade currencies through illicit “caves” and keep wads of nearly worthless cash.
Use of supercharging
Mauricio Di Bartolomeo, co-founder of cryptocurrency company Ledn, is especially optimistic about the seismic change that Milei’s election could mean for both digital assets and Argentina. Di Bartolomeo, who is Venezuelan, said he relied on bitcoin when he battled the chaos engulfing his own country’s economy.
““Bitcoin and cryptocurrencies were already solving a problem for Argentines, but Milei’s presidency could enhance their use and relevance for Argentina,” he said.
“Milei plans to dollarize the Argentine economy by killing the peso and closing the Argentine Central Bank. She also plans to get rid of ‘legal tender’ laws, meaning Argentinians will be able to freely choose whatever currency (or digital asset) they want to use for their daily use.” Di Bartolomeo added. “Argentines will be able to carry out legal transactions in bitcoins and stablecoins very soon. “This will further drive adoption.”
