Argentina is in a serious inflation dilemma. Economist Carlos Perez warned that the country's inflation rate will reach 147% in 2023, and people are in urgent need of alternatives to avoid asset shrinkage. He continued to look forward to the country's presidential candidate Javier Milei, who also advocates Bitcoin. If he is successfully elected, he will legalize Bitcoin, which will then set off a surge in prices.
David Puell, an Ark investment research assistant under "female stock god" Cathie Wood, released an investor report on Monday (August 28). He said that the adoption rate of Bitcoin in El Salvador is very low, even lagging behind Argentina. Since the US dollar was established as the legal currency of El Salvador in 2001, it has helped the country avoid inflation disasters and provided a more stable and trustworthy monetary system.
Although El Salvador also granted Bitcoin legal tender status in 2021, the Bitcoin market has fluctuated greatly since then, once falling by more than 20%, and the high threshold for use has led to a low adoption rate. Compared with the indifference of the people of El Salvador, Argentina's adoption rate of Bitcoin is getting higher and higher.
Perez said that Argentina's inflation rate is expected to reach 147% in 2023, and people are in urgent need of alternatives to prevent their wealth from shrinking. He predicted that Milei's victory in the summer primary election on August 13 not only foreshadowed a possible change in Argentina's economic policy, but also triggered a sharp rise in the price of Bitcoin. It should be noted that after the news of his primary victory came out, the local Bitcoin price soared by more than 20% to 10.2 million Argentine pesos in 24 hours.
Puell added that Bitcoin could see a huge upside if Milei officially wins the presidency in the October election.
Milei will need time to fulfill his campaign promises to abolish the peso currency and cut grain taxes if he wins the election, advisers told Reuters, adding that he could avoid congressional hurdles by using executive decrees.
Ramiro Marra, a member of Milei's inner circle and the party's candidate for mayor of Buenos Aires, said he would dollarize the economy within two years after his stunning victory in this month's primary election and planned to eliminate huge taxes.
It is worth noting that although Milei's bold vision and radical reforms in support of Bitcoin are supported by most groups, they also face strong resistance from many large institutions, authorities and social forces. Some people believe that cryptocurrency has not yet been widely adopted around the world, and many people do not have the technical literacy required to truly use it, especially vulnerable groups such as young children, the elderly and the disabled. Most of the current users of cryptocurrency come from the middle and upper elite classes and educated young people because they have the ability to obtain information and foreign currencies.
Some people in the country's market have expressed fear of cryptocurrencies, and this fear is well-founded. Although Argentines are accustomed to volatility, the rise and fall of cryptocurrencies still scare many people because they hope to seek stable savings. Without financial knowledge and economic literacy, cryptocurrencies do not seem to be a good guarantee. After all, this is a sea full of "Ponzi schemes".
Most importantly, foreign media quoted professionals as saying that Argentina would not be able to pay through Bitcoin because the Argentine Senate had approved a $45 billion debt agreement with the International Monetary Fund (IMF), one of the terms of which did not encourage the use of cryptocurrencies.
Other critics have begun to question Milei's stance, wondering whether it is truly good for the country or just a political ploy to win votes from young voters who are well-versed in technology.
