Bitcoin Advocate Javier Milei Faces Setback Ahead of Argentine Presidential Election

Bitcoin Advocate Javier Milei Falls Behind as Argentina’s Presidential Election Heads to Runoff

Pro-Bitcoin candidate Javier Milei is trailing as Argentina’s presidential election approaches. He did not secure a win in the first round of the Argentine presidential election and will now face off against Economy Minister Sergio Massa in the runoff on November 19.

As of October 23, with more than 90% of the votes counted, Bloomberg reported that Massa is leading with over 36% of the support, while Milei is behind with over 30% of the votes.

Presidential candidates in Argentina need 45% of the vote or 40% with a 10% lead to win the presidency outright. This outcome may come as a surprise, as Milei initially led the preliminary presidential election with around 30% of the votes back in August.

Milei, who describes himself as an anarchist capitalist, aimed to reduce the size of the government and abolish the Central Bank of Argentina, which he considers a scam. He also planned to convert Argentina’s peso to the U.S. dollar, in line with El Salvador’s Bitcoin-friendly approach.

Milei’s Liberty Advances (La Libertad Avanza) coalition is seen as a mix of libertarianism and extreme individualism.

He has also criticized Bitcoin as a response to “central bank scammers” and argued that fiat currency allows Argentine politicians to deceive the people through inflation.

On the other hand, Massa has pledged to launch a central bank digital currency (CBDC) to “address” Argentina’s prolonged inflation crisis and has opposed the idea of using the U.S. dollar.

The election comes against the backdrop of 40% of Argentina’s population facing poverty and exhaustion due to the country’s escalating debt crisis. Annual inflation is also approaching 140%.

Argentina will hold the runoff election on November 19, and the candidate with the most votes will become the president for a 4-year term.

Bitcoin Dreams Are Coming True in Argentina and Turkey

It’s no surprise that a Bitcoin-supporting candidate recently emerged victorious in a primary election in Argentina.

Just before the digital asset market experienced heightened volatility and Bitcoin’s descent due to rising interest rates and limited market liquidity, Javier Milei gained international attention by unexpectedly winning the Argentinean primary election.

Javier Milei, a libertarian candidate affiliated with the “La Libertad Avanza” party, is an outspoken advocate for Bitcoin. He believes that Bitcoin symbolizes the return of money to its original creators, the private sector.

Milei also advocates for the dismantling of Argentina’s central bank, which he views as a deceptive institution used by politicians to impose inflationary taxes on the general public.

While it’s not surprising for a candidate in a country plagued by high inflation (currently estimated at over 100% annually) to criticize the central bank, it raises broader questions about the global cryptocurrency experience.

When we hear statements like “Bitcoin is too risky,” we must remember that, as U.S. citizens and dollar holders, we are speaking from a position of significant privilege, often referred to as “exorbitant privilege.”

Coined by French Finance Minister Valéry Giscard d’Estaing in the 1960s, exorbitant privilege refers to the unique advantages enjoyed by the United States due to the widespread use of the dollar in international trade, finance, and as a global reserve currency.

These advantages include the U.S. government’s ability to print dollars with minimal consequences and to borrow at lower interest rates compared to many other nations, some of which have a history of financial instability, such as Argentina.

The global reserve status of the dollar also simplifies monetary policy decisions for the U.S., as the Federal Reserve effectively serves as the world’s central bank, setting the tone for other central banks to follow similar rate policies to defend their exchange rates.

As John Connally, President Richard Nixon’s Treasury Secretary, famously told a group of European finance ministers: “The dollar is our currency, but it’s your problem.”

So, what has the Bitcoin investment experience been like for holders outside of the local dollar system?

Over the past five years, most Bitcoin holders in countries with currencies other than the U.S. dollar have seen substantial gains in Bitcoin value, largely due to the depreciation of their local currencies relative to the dollar, driven by rising U.S. interest rates.

Additionally, Bitcoin itself has delivered a 31% return relative to the U.S. dollar over this period (as indicated by the orange bar in the Bitcoin vs. USD return comparison).

This five-year performance underscores the strength of Bitcoin relative to a robust U.S. dollar. Notable exceptions during this period include Argentina (which provides context for Milei’s primary election success) and Turkey.

These countries have grappled with significant inflation rates of 60% and 33%, respectively. Bitcoin holders in Argentina and Turkey have been able to safeguard their purchasing power and withstand challenging political and economic conditions within their countries by leveraging a decentralized and digital store of value.