For most people, bitcoins are nothing more than a passing fad. But the El Salvadorian peso is no longer one of the world’s most bitcoin-heavy currencies. You see, between September 6, 2021 and May 9, 2023 – that’s just over a year and a half – El Salvador accumulated 2,301 bitcoins for more than US$100 million. Here’s how things have played out so far…
The Government of El Salvador has publicly remained neutral in the face of bitcoin’s 60 percent decline from its all-time highs in recent days as well as the reduction in the value of its cryptoactive reserves, while President Nayib Bukele has not addressed the issue on his social media networks since Wednesday.
The government of El Salvador adopted bitcoin in September 2021 as a legal tender, allocated more than 200 million dollars for its implementation, and has made it a main economic initiative.
The Government has not shown signs of backing down, despite the sudden drop in the price of this cryptocurrency, as international organizations have suggested, like the International Monetary Fund (IMF), and Bukele announced a new purchase for more than 15.3 million Dollars.
El Salvador accumulated 2,301 bitcoins for more than 100 million dollars between September 6, 2021, and May 9, 2022.President Bukele announced 10 purchases that range in value from 30700 to 58,000 dollars. No information is provided beyond the president’s tweets.
El Salvador has experienced a 34% drop in the value of its reserves due to the bear market.
In a post on May 10, Bukele stated that he might sell the 500 bitcoins he purchased on May 9.Selling these coins would have made him almost a million dollars in 11 hours, but he didn’t.
Since then, the president of the Central American country has not addressed the issue.
EFE attempted to contact a press contact at the Ministry of Communications to inquire about the government’s position regarding this decline in the value of bitcoin, but was unable to do so.
Along with economists and some members of the Salvadoran opposition, the IMF was the first to call for an end to bitcoin use in El Salvador.
Rating agencies have reduced the country’s risk rating due to the “uncertainty” introduced by cryptocurrency adoption and the amount of funds needed in the coming years.
Due to the lack of a “credible plan” to deal with El Salvador’s debt, the country has recently been told to prepare for default on its debt due in 2023 and 2025.In spite of the President of El Salvador’s commitment to cryptocurrencies, it did not lead to an increase in El Salvador’s debt levels or financial problems covering its own budget, but it hurt the country’s image as well as the confidence of the aforementioned organizations.
In addition to releasing 1 billion dollars of crypto-backed bonds, the government of El Salvador plans to build a bitcoin city. We are experimenting as well as exploring new financing options for the country.
As a mechanism for managing El Salvador’s debt, bitcoin bonds might be a better way to manage it,” said Alejandro Zelaya, Minister of Finance.
Zelaya said he was looking for “the ideal dates” in order to begin negotiations on this issue, due to take place in March, but Bukele delayed it to focus on a pension reform.
In June 2021, he posted a message about bitcoin that was recalled by President Bukele on May 11.”I was always impressed with Steve Jobs because he never looked at Apple’s stock price. Steve knew where Apple was headed. Bukele wrote, “When he understands it, the stock market will follow.” He added, “1 #BTC = 1 #BTC.”
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Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
