Economy

Argentina’s Financial Crisis: Can Bitcoin Offer an Escape from the Peso’s Devaluation?

Economist Ammous warns of Argentina’s “debt and inflation Ponzi,” predicting collapse and investor exodus to USD or Bitcoin.

byAndres Castro

September 16, 2025, 5:24 PM

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Executive Summary

Economist Saifedean Ammous warns that Argentina’s economic program, led by President Javier Milei, is an unsustainable “debt and inflation Ponzi” due to its reliance on high-yield government bonds.

Ammous identifies “la bicicleta financiera,” where the government prints pesos to offer high-yield bonds that outpace devaluation, as a Ponzi scheme leading to an unsustainable cycle of currency devaluation.

He predicts an imminent collapse of the peso and bond market, forcing investors to stable assets like the U.S. dollar or Bitcoin, and ultimately requiring an IMF bailout for Argentina.

The Story So Far

Argentina’s financial instability is rooted in its “bicicleta financiera” strategy, a system where the government issues high-yield bonds to attract investors and outpace the rapid devaluation of the peso, which critics argue is an unsustainable Ponzi scheme requiring continuous currency printing and further contributing to devaluation.

Why This Matters

Economist Saifedean Ammous warns that Argentina’s current economic program, based on high-yield government bonds, is an unsustainable “debt and inflation Ponzi” on the verge of collapse. This impending crisis is expected to trigger a mass investor exodus from the peso and bonds towards more stable assets like the U.S. dollar or Bitcoin, ultimately forcing the Argentine government to seek an IMF bailout and highlighting the severe financial instability facing the nation.

Who Thinks What?

Saifedean Ammous views Argentina’s “bicicleta financiera” as an unsustainable “debt and inflation Ponzi scheme” on the brink of collapse, predicting investors will rapidly divest from bonds and the peso towards the U.S. dollar or Bitcoin.

President Javier Milei’s administration is implementing an economic program that includes high-yield government bonds and has not shut down the central bank, which Ammous criticizes as contradictory to libertarian rhetoric.

Investors are currently participating in Argentina’s “bicicleta financiera” to profit from short-term government bonds but are predicted by Ammous to exit to more stable assets once the peso’s devaluation surpasses bond returns.

Saifedean Ammous, economist and author of “The Bitcoin Standard,” has issued a stark warning regarding Argentina’s financial system, labeling President Javier Milei’s economic program an unsustainable “debt and inflation Ponzi.” Ammous argues that the country’s reliance on high-yield government bonds is on the brink of collapse, predicting a mass exodus of investors towards safer assets like the U.S. dollar or Bitcoin as the peso continues to devalue.

Argentina’s ‘Bicicleta Financiera’ Under Scrutiny

According to Ammous, the core of Argentina’s financial instability lies in what locals call “la bicicleta financiera.” This strategy involves investors purchasing short-term government bonds that offer interest rates designed to outpace the rapid devaluation of the Argentine peso.

He contends that this setup, despite becoming the nation’s most lucrative industry, is a textbook Ponzi scheme. Ammous highlighted that the government must continuously print more pesos to offer these high yields, which in turn further devalues the currency, creating an unsustainable cycle.

Signs of Imminent Collapse

Ammous pointed to several indicators suggesting the system is nearing its breaking point. The peso has already exceeded its target exchange band despite significant forex interventions totaling $540 million.

Additionally, bond rates have surged to 88%, while Argentine stocks and bonds have experienced significant plunges. These financial woes are compounded by recent corruption allegations against President Milei’s administration and losses in recent elections.

Bitcoin as an Exit Strategy

The “Bitcoin Standard” author warned that once the peso’s devaluation surpasses the returns offered by government bonds, investors will rapidly divest from both bonds and the peso. This scenario, he projects, will trigger a rush towards more stable assets.

Ammous believes this will lead to a collapse of both the peso and the bond market, ultimately forcing the Argentine government to seek a bailout from the International Monetary Fund (IMF).

Profiting from the System

Ammous estimates the scale of this carry trade to be between $40 billion and $80 billion in short-term debt, diverting crucial capital from productive sectors of the economy. He also noted that certain entities, including insiders and foreign institutions like JPMorgan, have allegedly profited by strategically timing their entry and exit from the scheme.

He critically remarked that “Random bankers from all over the world managed to outperform the vast majority of stocks and traders worldwide by simply playing this rigged game of Russian roulette.”

Critique of Milei’s Stance

Ammous concluded by criticizing President Milei’s refusal to shut down Argentina’s central bank, suggesting it exposes the libertarian rhetoric as disingenuous. He emphasized that stopping the “Ponzi” is not merely an idealistic goal, but a practical and material necessity for the country’s financial health.