Bitcoin, the world’s number one cryptocurrency by market capitalisation, has been championed by many as a suitable hedge against the often-reckless and self-serving economic policies of governments. This includes episodes of currency devaluation caused by the very threat of such policies.

Such is happening right now in Argentina. Today, the national currency, the peso, has tanked by almost 25 percent versus the US dollar.

Economic Instability Drives People to Bitcoin?

The Argentine peso dropped by close tou 25 percent in some exchange markets as trading opened this morning. News reports claim that the cause of such a plunge is the heavy defeat suffered by President Maurico Macri in this weekend’s party primary elections.

The current centre-right head of state polled 15 points less than his centre-left opponent, the Peronist candidate Alberto Fernandez.

According to a report in France24, Fernandez commented this morning on the election result on a national radio station:

“The president cannot have peace of mind. The markets are giving warning that the government has put itself in a position it cannot respond to.”

WATCH OUT: The Argentine Peso is collapsing. Already down 25% against the USD today. (H/t @jsblokland)

Could this be the first of many to be exposed in a currency crisis? pic.twitter.com/bpv9CGhOs5

— Pomp (@APompliano) August 12, 2019

It appears that the threat of the more leftist, hands-on-the-economy-Fernadez taking power in the nation at the expense of the pro-business Macri has caused capital to pour rapidly out of the Argentine economy.

Such a sudden drop makes even Bitcoin’s volatility look relatively tame. It also serves as a reminder of the cryptocurrency’s apparent emerging utility as a “safe haven” asset.

Some cryptocurrency proponents have argued that the recent price rallies seen during much of 2019 have been caused by similar instances of capital flight elsewhere. Chinese citizens are thought to be buying up Bitcoin to protect against its government “weaponising” its currency versus the US dollar in the ongoing trade war.

Others believe that a more extreme form of currency devaluation, like that plaguing Venezuela in recent years, will be the grounds for “hyper-Bitcoinisation” – or the mass rejection of government-issued fiat currency in favour of Bitcoin. The concept of hyper-Bitcoinisation is discussed at length in this 2014 Nakamoto Institute article.

Being immune from the inflationary pressures central banks and governments around the world use to balance their books, Bitcoin’s hard monetary policy, enforced by the most powerful computer network on the planet, is attractive to many as a hedge against their own nations’ currencies. In fact, popular Bitcoin evangelist Andreas Antonopoulos often recounts him persuading his Greek mother to put some of her retirement savings into the cryptocurrency to protect her wealth from the emergency banking restrictions put in place following the collapse of the nation’s banks.

Related Reading: Goldman Sachs Talks Bitcoin: Where Does Wall Street Think BTC is Going Next?

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