In context: The crypto crash is impacting many holders of digital assets, from individuals who have lost their life savings to crypto-investing businesses. The collapse is also having an impact on El Salvador. The country, which made Bitcoin legal tender last year, is estimated to have lost around $40 million through the falling price of BTC.
Bitcoin became an official currency alongside the US dollar in El Salvador last year. The move has proved controversial: many citizens feared the volatility of BTC would make the country’s economic problems even worse, and the government’s wallet app has proved far from reliable. El Salvador also faced pushback from the World Bank and the International Monetary Fund (IMF) over its decision.
Things have become even worse in El Salvador due to this week’s crypto crash that has seen almost $1 trillion wiped off cryptocurrency’s market cap. Bloomberg writes that Bitcoin’s 40% decline since late March means President Nayib Bukele’s losses on BTC have reached around $40 million, and that has raised questions over whether the government will be able to meet its next debt payment—an $800 million Eurobond repayment due in January next year. Several international credit agencies have already downgraded El Salvador’s credit rating to CCC, aka “junk.”
El Pais notes that the IMF, which could help El Salvador meet its next foreign debt payment, has urged Bukele to drop Bitcoin as legal tender, complicating the country’s relationship with the organization.
— Nayib Bukele (@nayibbukele) May 9, 2022
Bukele obviously isn’t concerned that adopting Bitcoin as legal tender was a costly mistake. On May 9, he bought 500 more coins for $15.5 million. At the time of writing, their value is down by about $500,000. He also reminded people that Bitcoin City is coming along beautifully, apparently.
h/t: PC Gamer
Masthead credit: Useacoin