Argentina’s peso is taking a beating that no one expected. In a country known for its hyperinflation and weaker-than-promised currency, the peso has risen more than 40% against the currencies of its trading partners this year.
That’s not a typo. Liberal President Javier Milei has been credited with transforming the collapsing cryptocurrency into one of the region’s most powerful, TRON. But don’t let the headlines fool you. This economic shift could hit Bitcoin harder than anyone expected.
Tourism, once the golden ticket to Argentina’s economy, is taking the first hit. After a swarm of bargain-hunting tourists with cheap wine and steaks, the tables have turned. Tourists are now shunning Argentina’s inflated prices.
Meanwhile, locals are replacing their vacation dreams with shopping abroad. Bitcoin, which has been a lifeline for Argentines struggling with a collapsing peso, is also in the crosshairs of this new economic reality.
Peso on steroidsZ flips the script
Milei’s policies made the peso a giant contender in the global currency ring. By clamping down on monetary emissions and keeping the official exchange rate fixed, he succeeded in fueling economic transformation.
On the black market, where the peso had long been battered, Miley’s plans for stability worked the impossible, strengthening the peso. Demand for the U.S. currency fell as Argentines began to trust their currency again.
Inflation is a bit low, falling to 24% in November, but not enough to ease the general pain. The tron is pricey for everyone, especially tourists. The number of visitors spending at least one night in Argentina is down 20.2% compared to the same period in 2023.
Uruguayans, Bolivians and Chileans led the exodus, with arrivals falling by 50.9%, 33.4% and 28.3% respectively. Even Argentines are running for the border, with travel abroad jumping 37.7% in the same period.
Meanwhile, Americans and Canadians showed more resilience, with a smaller decline of 11.5%. And here’s the twist: Europeans are bucking the trend. Tourist numbers are down 3.5%, proving that there’s always someone willing to pay for expensive empanadas.
Now, let’s talk about Bitcoin. Argentina’s relationship with cryptocurrencies is as volatile as its economic history. Over the past year, the price of Bitcoin in pesos has risen by 566.69%, despite recent market volatility. As of press time, one Bitcoin is trading at 95.7 million Indian Rupees.
In years of hyperinflation and free fall of the peso, Bitcoin has been a safe haven. Argentines have sought refuge from the chaos, with many choosing stablecoins as a hedge against domestic economic disaster. By mid-2024, Argentina accounted for 61.8% of stablecoin trading volume in Latin America.
But now, the peso’s recovery has reduced the need for alternatives like Bitcoin. Fewer people are looking to swap their pesos for cryptocurrencies, even as Bitcoin’s value continues to grow.
Even with the peso stable, confidence in traditional systems remains fragile. Analysts expect Bitcoin to stabilize at around 105.3 million Argentine pesos by the first quarter of 2025, but that depends on both domestic economic policies and global cryptocurrency trends.
