After almost a year, El Salvador’s bet on buying BTC for its reserves has started to go into the red. In fact, the country’s operation operates at a loss of almost 40%, according to data compiled by the Bloomberg.
The survey covers all purchases that totaled 2,301 BTC in reserves. In this sense, the drop in the total value of BTC reached $37 million.
Nayib Bukele, the country’s president, spent a total of $103 million on BTC, according to Bloomberg data. Now, however, BTC purchased is worth $65.6 million, down exactly 37%.
On May 10 Bukele announced the purchase of another 500 BTC, the largest ever made by the country to date. At the time, the president said that El Salvador was “buying the dip”.
However, the purchase, which cost $15.3 million at the time, is now worth about $14.1 million. In other words, even the “buy at the bottom” has already resulted in almost 10% loss for the country
From euphoria to frustration
El Salvador became the first country to make BTC a legal tender for BTC on September 7 last year. The move was celebrated as a historic milestone around the world.
That same month, El Salvador bought 150 BTC and then another 420 BTC purchase in October. The following month, the cryptocurrency hit its all-time high of nearly $70,000. So far, Bukele’s decision has been seen as visionary.
Furthermore, the country was not limited to buying BTC and using it as a currency. Bukele also said that El Salvador would launch BTC-backed debt securities, the BTC Bonds. The country would also have Bitcoin City, a city planned and built with the bitcoiner community in mind.
The president said that the country aimed to raise $1 billion with BTC Bonds. Half of this amount would be used to buy BTC, while the other half would finance the construction of the city.
But cryptocurrency price drops hampered Bukele’s plans. BTC Bonds have been systematically delayed and are unlikely to launch in 2022. But the first BTC City sketches were released by the president this week.
Bukele receives criticism
Since adopting BTC as El Salvador’s currency, Bukele has been criticized for a lack of transparency in the way the country is managing its reserves. It is unknown who controls the wallets’ private keys, as well as what the country’s funds are destined for.
The president also faces external pressure, especially from US authorities and the International Monetary Fund (IMF). Both are against the adoption of BTC and have already called for the country to repeal the BTC Law.
However, Bukele did not go back on his plans and remains active despite the recent devaluation of the cryptocurrency.