Bitcoin price in Argentine pesos, as effectively traded on cryptocurrency exchanges, is nearly double Google’s theoretical price.

Bitcoin’s price on domestic exchanges has soared to 19.6 million Argentine pesos, up from 14.2 million when BTC reached its all-time high in United States dollars in November 2021. This means that despite a 61.5% drop from $69,000, investors in Argentina have still managed to accrue gains of 38% when measured in the local currency.

Bitcoin price in pesos at Bitso exchange. Source: Bitso

However, one may encounter a different result when consulting Google or CoinMarketCap for Bitcoin’s price in pesos. The answer to this discrepancy lies in the official currency rate for the Argentine peso, which is more intricate than most investors are accustomed to.

To begin with, there is the official rate, known as the “dollar BNA,“ set by Argentina’s central bank and used for all government transactions, as well as for imports and exports.

Bitcoin price in pesos on Sept. 21. Sources: Google, Ripio, Bitso.

Observe how the Bitcoin price in Argentine pesos, as effectively traded on cryptocurrency exchanges, is nearly double Google’s theoretical price.

This theoretical price is calculated by multiplying the BTC price on North American exchanges in U.S. dollars by the official Argentine peso rate provided by the local government. This phenomenon is not unique to cryptocurrencies; it also affects other highly liquid international assets, such as stocks, gold and oil futures.

By artificially strengthening the official rate in favor of the Argentine peso, the government aims to stabilize the economy, reduce capital flight, and curb speculative trading by making it more expensive to purchase foreign currency and store wealth in U.S. dollars. This measure may also increase the cost of imports while boosting exports, with the goal of improving the trade balance.

However, manipulating the official foreign exchange rate, as seen in Argentina’s case, ultimately contributes to inflation and impedes economic growth. Firstly, it creates incentives for the existence of an unofficial and unregistered market, known as the “dollar blue,” which also fosters illegal activities, undermines financial transparency and discourages foreign investment.

This leads to varying exchange rates, depending on the market in which the transaction occurs and whether or not it involves the government and official banks.