Argentina’s Hyperinflation Outpaces Crypto Gains Despite Bitcoin All-Time High

In Argentina, a nation with 47 million people, the possibility of a full-scale currency collapse is becoming increasingly likely due to prolonged periods of hyperinflation brought on by ineffective policies and budget deficits. With its impressive performance when priced in the Argentine peso, could Bitcoin (BTC) adoption be on the rise?

Throughout its history, the Argentine government has continuously increased the money supply by issuing bank deposits and government bonds. In fact, M1, which includes currency, demand deposits, and other checkable deposits, has seen an overwhelming 277% increase from 2.81 trillion pesos in July 2019 to 10.66 trillion pesos, a significant jump.

Advantages and Disadvantages of Web 3.0 and Crypto Adoption

To examine the potential of crypto adoption in Argentina, it is important to consider the advantages and disadvantages of Web 3.0. With the emergence of Web 3.0, people have access to the best web 3.0 stocks and can learn web 3.0. However, it is also important to consider the potential of crypto banks and the implications of crypto currency in Nigeria.

Ultimately, the adventure gold crypto offers a great opportunity for Argentina to embrace the potential of crypto adoption. By understanding the advantages and disadvantages of Web 3.0, Argentina can move forward and reap the benefits of crypto adoption.

What happened to Bitcoin’s price in Argentine pesos?

Bitcoin’s price on domestic exchanges in Argentina has skyrocketed to 19.6 million Argentine pesos, despite a 61.5% decrease from the all-time high of $69,000 in US dollars recorded in November 2021. This means that investors in Argentina have still been able to gain 38% when measured in the local currency.

However, the price of Bitcoin in pesos on Google or CoinMarketCap may be different. This is due to the official currency rate for the Argentine peso, which is more complex than many investors are used to.

To understand, there is the official rate, known as the “dollar BNA,” set by Argentina’s central bank and used for all government transactions, imports and exports.

Note how the Bitcoin price in Argentine pesos, as traded on cryptocurrency exchanges, is almost double the theoretical price according to Google. This theoretical price is calculated by multiplying the BTC price on North American exchanges in US dollars by the official Argentine peso rate set by the government. This is not exclusive to cryptocurrencies; it also affects other highly liquid international assets, such as stocks, gold and oil futures.

By artificially strengthening the official rate in favor of the Argentine peso, the government attempts to stabilize the economy, reduce capital flight, and deter speculative trading by making it more expensive to buy foreign currency and hold wealth in US dollars. This measure may also increase the cost of imports while promoting exports, with the goal of improving the trade balance.

However, manipulating the official foreign exchange rate, as seen in Argentina’s case, ultimately leads to inflation and hinders economic growth. Firstly, it encourages the existence of an unofficial and unregistered market, known as the “dollar blue,” which also encourages illegal activities, undermines financial transparency and discourages foreign investment.

This results in different exchange rates, depending on the market in which the transaction happens and whether or not it involves the government and official banks.

Is Bitcoin a reliable store of value for investors in Argentina?

Despite the fact that Bitcoin has gained 150% in value over the two years ending Sept. 21, going from 7.84 million pesos to 16.6 million pesos, the official inflation rate in Argentina during this period has exceeded 300%. This means that Bitcoin has not been a dependable store of value.

Investors who chose to put their money into U.S. dollars, either in the traditional form or stablecoins, have seen their investments increase by 297%, which is in line with the inflation rate. This comparison is based on the two-year period between September 2021 and September 2023.

This outcome is likely to favor the adoption of stablecoins in Argentina rather than Bitcoin, however, it has provided investors with the opportunity to learn about the advantages of self-custody and scarcity, given that the local currency has been devalued by its continuously inflating supply.

In the end, for Argentinians, as long as the U.S. dollar is able to keep up with the local inflation, there is little chance for Bitcoin to become the preferred store of value for adventure gold crypto and crypto banks in Nigeria.