- Bitcoin rose to an ATH in the Argentine market on the day Javier Milei was elected president.
- There was a connection between the growing preference for cryptos and rising inflation.
The elevation of far-right politician Javier Milei in Argentina as the country’s new president has generated significant interest in cryptocurrency circles.
In fact, the king of cryptos, Bitcoin [BTC]rose above $37,000 on the news and has held onto its gains through press time, according to CoinMarketCap.
A strong pitch for Bitcoin
The optimism stemmed from the president-elect’s strong support for Bitcoin in particular and cryptocurrencies in general. As news of his election trickled in, a video highlighting his pro-Bitcoin stance made the rounds on social media.
In the clip he makes very controversial comments about the Argentine Central Bank and the existing financial system.
Second Bitcoin President.
congratulations for @JMilei about his crushing victory in Argentina. pic.twitter.com/CNOqFbb5Q8
— Balaji (@balajis) November 20, 2023
Milei called the Central Bank a “scam” and a tool the establishment uses to harass the public with inflation taxes. Rather, he projected Bitcoin as the way to return monetary power to the people.
Inflation is becoming a persistent topic
The liberal ideas were rooted in Argentina’s worst inflation in three decades, which has caused a cost-of-living crisis in the South American country.
Argentina’s inflation rate rose to 142.70% in October 2023, the highest since the hyperinflationary phase of the early 1990s. And the worst may yet lie ahead for Argentinians, with Trading Economics predicting 170% inflation by the end of the current quarter.
Source: Trade Economics
The national currency Argentine Peso (ARS) has been in a downward trend for several years since the Covid-19 pandemic. Its value against the US dollar (USD) fell more than 50% in the past year; data analyzed by AMBCrypto showed.
As people struggle to make ends meet, rising inflation became a hot issue in the presidential elections. Milei, known for his anarchist views, fought the election on an anti-Central Bank plank and promised to disband the organization if he came to power.
Against this context, his election has significant value for currencies that could potentially replace the ARS as legal tender in the country.
Although the president-elect has not yet signaled any intention to make BTC the legal tender, his past statements of support have given hope to enthusiasts.
Milei also praised Bitcoin’s scarcity-driven growth model, as opposed to the central banks’ money-printing model, which he said is causing the currency to lose value.
Bitcoin rose to an all-time high (ATH) in the Argentine market the day he became president. This suggested that the general public agreed with the populist leader’s views.
Source: trading view
The beginning of cryptos in Argentina
It was important to understand the reason behind Argentina’s preference for cryptos. It is common knowledge that when a native currency undergoes a massive devaluation, people want to convert their savings into safe haven assets such as the US dollar (USD).
Conventional exchange methods, such as commercial banks and online forex services, can be time-consuming. What’s the next option: stablecoins, or maybe even Bitcoin?
According to a recent report from Chain analysisthere was a connection between a growing preference for cryptos and rising inflation. Indeed, the volume of digital assets purchased with the Argentine peso increased as the currency depreciated.
Source: Chain analysis
Interestingly enough, the average Argentinian was the driving force behind this change. According to the 2023 Global Crypto Adoption IndexArgentina ranked 15th among the top 20 countries in terms of grassroots adoption.
Experts differ on the possible outcomes
However, the question still remained: will Bitcoin become the legal tender in the second largest South American economy?
Rahul Maradiya, co-founder and global CEO of AI-powered blockchain system CIFDAQ, said the question missed an entire point.
He said:
“What is striking about the ascension of Javier Milei is the same thing that is striking about Tom Emmer in the United States. There is someone in a position of authority in a country of significance who is not only willing to have a conversation about crypto, but who also actively sees its value proposition.”
Read Bitcoins [BTC] Price prediction 2023-2024
On the other hand, prominent crypto journalist Colin Wu sounded a bit more pessimistic. In his blog posthe stated that Milei’s immediate focus would be on reforming the central banking and financial sector.
He did not see Milei advocating for cryptos immediately after his presidency.