Argentina Currency Crisis Erupts: Milei's "Free Market" Dream Shattered, Peso big dump Hits Historical Low

Argentina has once again reached an economic tipping point. Despite President Javier Milei's implementation of new neoliberal reforms, the Central Bank has been forced to intervene to support the big dump of the peso. The peso to US dollar Exchange Rate has fallen to a historic low of 1510 pesos per 1 dollar, far below the levels when Milei took office less than two years ago, marking a severe test of the policies of a president previously seen as a “savior of the free market.”

The wave of liberalism led by Milei faces a reality check

After Javier Milei came to power, he became international headlines for implementing a floating exchange rate for the peso and promising to end Argentina's monetary crisis through radical economic freedom. He was even welcomed by some Bitcoin supporters who believe that his ideas may signify a historic breakthrough for Argentina in breaking free from long-term inflation and poorly managed monetary policies.

However, the stable hope has been shattered. As Bitcoin advocate, Austrian economist, and author of “The Bitcoin Standard,” Saifedean Ammous commented: “Despite the central bank and government using borrowed dollars to intervene, the exchange rate of the peso to the dollar has fallen to 1510 pesos to 1 dollar, far below the levels of 900 pesos in the black market and 300 pesos officially when Milei took office less than two years ago. The Ponzi scheme is coming to an end.”

Central Bank forced to intervene massively in the market

This week, the Central Bank of Argentina was forced to use nearly 1 billion USD of reserves, marking the largest intervention since 2019, to support the peso. Despite efforts to keep the peso within the trading range agreed upon with the International Monetary Fund, the peso continues to depreciate.

Previously, the Milei government partially implemented currency floating in April, which resulted in:

· Capital outflow

· Legislative deadlock

· The escalation of public anger

Despite the inflation rate in August falling from its peak to 21%, it remains one of the highest levels in the world.

Argentina crisis continues to worsen

Due to the parliament's obstruction of crucial austerity and privatization measures, Argentine assets have been severely impacted, and Milei's fiscal policies have also suffered. The black market peso has fallen to historic lows, while foreign exchange reserves continue to dwindle at an alarming rate, threatening the country's ability to repay debts and maintain even limited intervention measures.

The intervention measures of the Central Bank now directly contradict the original liberal plan and recreate the history of Argentina's long-standing failures in pegging and emergency currency defense.

The International Monetary Fund is concerned about this, as Argentina's dollar reserves are decreasing, which some analysts have termed a “self-fulfilling collapse.” The more the government intervenes, the lower people's confidence in the peso as a store of value.

Argentinians turn to the US dollar instead of Bitcoin

Bitcoin supporters repeatedly point out that Argentina is a compelling example of why a permissionless non-state currency can provide a lifeline. Peso holders find their life savings destroyed time and again, while Milei's opposition to fiat currency resonates with Bitcoin enthusiasts who dream of a world without centralized money printing and state-enforced capital controls.

However, the current crisis reveals a brutal reality: liberal ideology cannot combat deep-seated institutional dysfunction. The Argentine people, battered by inflation and failed reforms, are flocking to the black market for dollars instead of Bitcoin. The trading volume on global cryptocurrency exchanges spikes during the outbreak of the crisis, but compared to the desperate dollarization, its daily usage remains limited.

As the reserves continue to decrease and reform attempts are at a standstill, Argentina is facing a crossroads:

· Once dollarization occurs, it means giving up all monetary sovereignty.

Continuous intervention may further deplete reserves and trigger more social unrest.

In this desperate environment, the importance of Bitcoin as a decentralized, anti-seizure, and anti-inflation asset is particularly prominent. However, the turmoil in Argentina indicates that the adoption of Bitcoin is a slow process, challenged by institutional inertia, lack of education, and the pressures of daily survival.