El Salvador’s Bitcoin losses are equal to the country’s next bondholder interest payment, which is due on June 15.
El Salvador’s Bitcoin (BTC) investment is underperforming, with the value of its more than 2,000 units plummeting by roughly $40 million. The price of Bitcoin has dropped to its lowest level in almost a year as a result of current market conditions.
El Salvador spent roughly $105 million on Bitcoin purchases, but the worth of its assets as of May 12 was around $66 million.
To strengthen the country’s economy, President Nayib Bukele made Bitcoin official tender in September 2021. El Salvador was also the first sovereign country to purchase Bitcoin.
BTC’s value has dropped 45% after El Salvador purchased its first coins, according to Coincu data.
The country’s losses, however, have not discouraged President Bukele, who disclosed that he purchased an extra 500 BTC after the current price drop.
The president of the Central American country stated that “1 BTC = 1 BTC” regardless of price performance would be understood by the rest of the world.
Investments in risky assets like Bitcoin have been criticized heavily for an indebted country like El Salvador. According to a Bloomberg story, the country’s Bitcoin losses are equal to its next interest payment to bondholders, which is due on June 15.
Carlos Acevedo, the country’s previous Central Bank Chief, summed up the issue best. He claims that Bitcoin investments are:
Risky because it’s an extremely volatile asset, and it’s an investment that is totally at the discretion of the president. He buys it on his phone when he wants to take advantage of the dip, but he doesn’t do it right because when he buys, there’s always a bigger dip.
President Bukele’s lack of accountability and impulsive purchases have split his people and weakened the country’s relationship with international organizations like the International Monetary Fund (IMF). El Salvador and the IMF have been negotiating an extended financial facility since last year.
In addition, US officials have expressed reservations about the country’s intention to accept BTC as legal tender. Some legislators sponsored a bill in February to look at how the US can defend itself against El Salvador’s Bitcoin decision.
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