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- While Milei has declined the de-dollarization bid by turning down the invitation to join the BRICS alliance, the new administration might be forced to adopt Bitcoin to deal with hyperinflation and the high local and international debt.
- Economists have argued that Milei will have a challenging term trying to balance his promises and keep his popularity for re-election for the second time.
The second largest country in South America, Argentina, has put a lot of hope on the new President, Javier Milei, to restructure the struggling economy that is facing enormous hyperinflation. The macroeconomics professor with a rich history in the economics of growth is facing one of his toughest assignments to improve Argentina’s gross domestic product (GDP), cut down the high national debt, and still retain his prominence as this is his first term as the president.
President Milei has signed 13 decrees, which are mostly related to restructuring the cabinet members and cutting down the number of ministries from 18 to 9. However, President Milei has yet to send home the Central Bank, which was one of his vocal policies in reinventing the country’s economic outlook.
Meanwhile, the country’s Central Bank is restricting access to dollars at the official exchange rate until President Milei announces the first measures of the promised shock therapy geared towards cutting down the high inflation. According to the country’s economic minister Luis Caputo on Monday, commercial banks can continue to operate as usual despite the uncertainty on the disparity in the dollar exchange rate which is about 385 officially but nearly 1000 in the liberal markets.
Argentina Needs Bitcoin to Fight Hyperinflation
The 53-year-old president gained popularity during the campaign period for pointing out that Bitcoin can be used to fight the country’s high inflation. Moreover, Bitcoin currently has an annual inflation of less than 2 percent and will be reduced by half during the next year’s halving event. With the heightened Bitcoin demand by institutional investors and countries already using it as legal tender, the value of the flagship coin will continue to outperform traditional investment products like stock indexes, precious metals, and treasury bonds.
Argentina can now use El Salvador as an example, which has made a major turnaround with its Bitcoin adoption plan. In addition to El Salvador’s Bitcoin investment having already broken even and made a profit of nearly $3 million, the country has attracted significant foreign investment, especially through tourism and now the Freedom Visa program.
Whether President Mile adopts Bitcoin as legal tender or not, economists argue he may be forced to negotiate a hostile global economic outlook, as the country has defaulted its international sovereign debt nine times of more than $132 billion.
BTC Price Action
Bitcoin price has been on a rising trajectory in the past year despite the regulatory crackdown on crypto-related companies. Trading around $41,300 Bitcoin price has surged nearly 150 percent YTD.
No coins selectedHowever, the short-term Bitcoin bulls are faced with increased selling pressure as miners and short-term holders take accelerated profit. As a result, Bitcoin price could drop to the next major support level around $38k, which could pave the way for altcoins to shine in the coming weeks.
