Saifedean Ammous Warns Argentina’s High-Yield ‘Bicicleta’ Could Push Investors Toward Bitcoin

• High-yield bond carry trade fueling peso weakness

• Economist Saifedean Ammous labels the setup a “debt and inflation Ponzi” and warns bond yields cannot outpace currency devaluation indefinitely.

• Short-term debt estimated at $40–$80 billion; bond rates near 88% and forex reserves interventions reported at $540 million.

Argentina peso collapse warning by Saifedean Ammous: learn why high-yield bonds risk a crash and how investors may seek Bitcoin or USD for protection. Read actionable takeaways now.

What is the Argentina peso collapse risk Ammous describes?

Argentina peso collapse risk refers to a scenario where rapid peso devaluation outpaces bond yields, forcing investors to abandon peso-denominated assets. Ammous argues this is driven by a high-yield carry trade that is unsustainable and could trigger capital flight to US dollars or Bitcoin.

How does “la bicicleta financiera” work and why is it unsustainable?

“La bicicleta financiera” is a short-term carry trade: investors buy high-yield government bonds while the central bank cushions devaluation with money creation. This cycle relies on continually higher yields and fresh pesos, which amplifies inflation and undermines the currency.

When devaluation exceeds bond returns, investors will sell bonds and pesos, causing a rapid collapse in both bond prices and the currency.

Saifedean Ammous warned Argentina’s high-yield bond strategy is unsustainable, calling it a “Ponzi” that could push investors toward Bitcoin as the peso crumbles.

Economist and author of “The Bitcoin Standard,” Saifedean Ammous, warned that Argentina’s financial system is on the brink of collapse, calling President Javier Milei’s economic program a “debt and inflation Ponzi” propped up by unsustainable bond yields and money printing.

In a post on X, Ammous argued that Argentina’s government has created a financial system where bond speculation is the only path to financial security. “The only concrete achievement of his administration so far is that it destroyed the currency and created a shitcoin casino,” he said.

At the center of the crisis is what locals call “la bicicleta financiera,” a high-yield carry trade where investors buy short-term government bonds that offer interest rates exceeding the pace of peso devaluation. According to Ammous, this setup, which has become the country’s most lucrative industry, is a textbook Ponzi scheme.

“The bicicleta is obviously unsustainable, because as the government offers high yields on its bonds, it needs to create more pesos, which devalues the peso,” he wrote. “It is impossible for this bicicleta to run forever,” he added.

Related: Argentina’s Milei shuts down task force investigating LIBRA scandal (reference, no external link)

Why does Ammous say the peso collapse is near?

Ammous points to market signals: the peso has breached targeted exchange bands despite reported $540 million in forex interventions. Bond rates approaching 88% coincide with steep declines in Argentine equities and sovereign debt.

He warns when peso devaluation overtakes nominal bond returns, a synchronized sell-off in bonds and currency will follow, prompting a rush into safer stores of value such as the US dollar or Bitcoin (BTC).

Bitcoin advocates call Bitcoin a safe haven for protecting assets. Source: Simon Dixon

“The peso collapses, the bonds collapse, and the government is left having to beg the IMF for a bailout,” Ammous wrote. He estimates the scale of the short-term carry trade at roughly $40 billion to $80 billion, diverting capital from productive uses.

He also accused insiders and major institutions of extracting profit by timing the market: “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.”

Ammous concluded that Milei’s refusal to dismantle the central bank exposes libertarian rhetoric as performative. “The longer it goes on, the more harmful it will be. It isn’t idealism to want the Ponzi stopped; it is practical material necessity.”

Related: Argentine lawmakers back Milei probe in Libra crypto scandal (reference, no external link)

What happened in Milei’s LIBRA memecoin episode?

In February, President Milei shared a post on X endorsing the Libra (LIBRA) memecoin, which surged to a reported $4 billion market cap before crashing by about 94% within hours. The episode inflicted investor losses estimated in the hundreds of millions and prompted calls for political accountability.

Argentina’s Anti-Corruption Office later issued a resolution saying Milei did not violate ethics laws, noting the post came from his personal account and was framed as a personal expression rather than an official endorsement.

Frequently Asked Questions

How immediate is the risk of a peso collapse?

Experts note market stress signs now—breaches of exchange bands and extreme bond yields—but timing is uncertain. The risk rises sharply if devaluation surpasses bond returns, prompting mass exits from peso assets.

What can local savers do to protect wealth?

Practical steps include diversifying into hard currencies, allocating a portion to globally traded assets, and considering regulated crypto like Bitcoin for part of a diversified strategy. Seek financial advice tailored to your situation.

Key Takeaways

• Structural risk: La bicicleta financiera relies on fresh peso issuance and high yields, creating systemic fragility.
• Potential flight to safety: Investors may favor USD or Bitcoin if devaluation erodes bond returns.
• Actionable steps: Assess exposure, increase liquidity in hard assets, and monitor policy and yield curves closely.

Conclusion

Saifedean Ammous characterizes Argentina’s current bond-and-money setup as a Ponzi-like mechanism that sharply raises the probability of an Argentina peso collapse. Investors and policymakers should prioritize transparency and measures that reduce dependency on short-term carry trades. Monitor key indicators and consider diversified protection strategies.