Bitcoin has proven to be a store-of-value in Argentina where you would have been better off buying BTC at its peak rather than hold the peso.
Argentina Ensnared Political and Economy Turmoil
The Argentinian economy continues to shrink, afflicted by stubbornly high inflation, which President Mauricio Macri, who is running for re-election, has been unable to rein in. Hence, he is becoming increasingly unpopular.
On May 19, 2019, the country’s grim economic outlook became even muddier when former president Cristina Fernandez de Kirchner announced she was running for the vice presidency alongside Alberto Fernandez (her former cabinet chief), in the upcoming presidential elections in October 2019.
Ms. Kirchner made the announcement a few days before the beginning of her trial for alleged corruption offenses related to public works contracts. The trial is scheduled to start on May 21, 2019. Reuters wrote,
Cristina Fernandez is considered by investors to be a riskier prospect because of her past populist policies. She introduced currency controls and tax increases on farm exports while in office between 2007 and 2015.
Fearing that if Ms. Kirchner returns to power it would bring populism back to the country, investors are now more than ever seeking refuge in safe-haven currencies, such as US dollars and Bitcoin.
In effect, Bitcoin’s value in relation to the Argentinian peso and Bitcoin’s trading volumes are reaching all-time highs. Likewise, the US dollar is an all-time high against the Argentinian peso. This set of circumstances will most likely reinforce Argentina’s inflationary spiral.
Argentinians Better Off Holding Bitcoin
Officially, as of March 2019, Argentina’s annual inflation rate reached over 55 percent. But even this elevated rate of inflation is questioned. Economist Steve Hanke argues that when using high-frequency data,