Salvadoran Leader Boosting Bitcoin May Have Doubts

SAN SALVADOR, El Salvador — The Salvadoran president of Bitcoin may have doubts about the cryptocurrency, whose value has fallen in recent weeks.

According to tracking site, El Salvador under the administration of President Nayib Bukele purchased a total of around $105 million in Bitcoin, starting last September and paying an average of nearly $46,000 per coin. .

It is now calculated that the value of this investment has fallen by more than 50%, or approximately $51 million.

So when a Bitcoin publication reported that El Salvador had lost “only” $40 million on its investment in the currency also known as “BTC,” Bukele tweeted in apparent disbelief on Tuesday: “ Are you telling me we should buy more #BTC?”

Bukele became the world’s first leader to make the cryptocurrency legal tender last year and was a dedicated booster at least until May, when he bragged about “buying the dip” of the cryptocurrency price. But the coin has slipped further since then.

Finance Minister Alejandro Zelaya sought in an interview with a local TV channel on Wednesday to put a good face on the situation, saying that because El Salvador hasn’t sold any of its bitcoins, it hasn’t really suffered. of loss.

“When they tell me that El Salvador’s fiscal risk has increased because of the supposed loss, that loss doesn’t exist,” Zelaya said. “That must be clear, because we haven’t sold.”

However, most companies and governments write down the value of what accountants call an “unrealized loss,” even if they don’t sell the troubled asset.

Zelaya also insisted that the Bitcoin slide doesn’t matter much to El Salvador, saying “it doesn’t even represent 0.5% of our budget.”

That could prove a tough sell in a country where about a fifth of the population lives on less than $5.50 a day.

In January, El Salvador rejected a recommendation from the International Monetary Fund to drop Bitcoin as legal tender.

Zelaya said at the time that “no international organization will force us to do anything, anything”, calling it “sovereignty”.

The IMF has recommended that El Salvador dissolve the $150 million trust fund it created when it made cryptocurrency legal tender and return any of those unused funds to its treasury.

The IMF has raised concerns about Bitcoin’s price volatility and the possibility of criminals using the cryptocurrency.

Bukele touted Bitcoin as a way to dramatically increase financial inclusion, attracting millions of people who previously didn’t have bank accounts in the financial system. He also talked about parallel tourism promotion targeting bitcoin enthusiasts.

Bukele led the push to adopt Bitcoin as legal tender alongside the US dollar. El Salvador’s Legislative Assembly made the country the first to do so in June 2021.

About Joan Dow

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