Bitcoin breaks historic record in Argentina, but hyperinflation exceeds gains

Even falling this Friday (22) and more than 50% below its historical record of US$69 thousand, the price of Bitcoin reached a new value record in Argentina, in relation to its price in pesos.

On local exchanges, the price of Bitcoin rose to 19.6 million Argentine pesos, compared to the previous record of 14.2 million when BTC reached its all-time high in US dollars in November 2021.

This means that despite a 61.5% drop from the all-time high of US$69,000, investors in Argentina still managed to accumulate gains of 38% when measured in local currency

Argentina has faced hyperinflation for several decades due to failed policies that resulted in budget deficits. As time progresses, the possibility grows that Argentina will face a complete collapse of its currency.

This hyperinflation means that Argentina has one of the most dollarized economies in Latin America, with the dollar being widely sold and accepted in the country, as is the Brazilian Real. In fact, several establishments in the main tourist cities in Argentina even accept Pix.

Bitcoin Argentina

This weakness of the national currency also results in a totally different exchange rate. There are more than 10 exchange rates in Argentina. There is the official rate, known as the BNA dollar, established by Argentina’s central bank and used for all government transactions, as well as imports and exports.

By artificially strengthening the official exchange rate in favor of the Argentine peso, the government aims to stabilize the economy, reduce capital flight and contain speculative operations. However, manipulation of the official exchange rate, as seen in the case of Argentina, ends up contributing to inflation and hinders economic growth.

Firstly, it creates incentives for the existence of an unofficial and unregistered market, known as the “blue dollar”, which also encourages illegal activities, undermines financial transparency and discourages foreign investment.

According to Bitso exchange prices in Argentine pesos, Bitcoin gained 150% in the two years ending September 21, rising from 7.84 million pesos to 16.6 million pesos.

However, the official inflation rate accumulated during this period exceeded 300%, making it incorrect to claim that Bitcoin has been a reliable store of value as the investor who sought to preserve the value of his money with Bitcoin is still at a loss.