El Salvador’s Reserves Suck As BTC Plunges
2 min read
If things are not going well for BTC investors this Monday and today, imagine for Nayib Bukele, the president of El Salvador.
Bukele was responsible for making BTC a legal tender in the country and is one of the biggest supporters of the asset. To show his support and conviction in BTC, Bukele used the country’s reserves to buy 2,301 BTC.
The purchased Bitcoins would be part of the president’s strategy for El Salvador and a hedge for the country.
However, the Bitcoins purchased by Bukele have lost a lot of value since they were acquired. This indicates that, in theory, with the recent drop in BTC, the nation has fewer reserves than before.
Today, according to Casey Wagner, El Salvador has less than $52 million. The country bought BTC at an average price of $30,744, a difference of $7,594 from the current price. In other words, Nayib Bukele would have lost no less than US$ 15,423 million of the country’s reserves.
The drop in reserves comes as El Salvador continues to delay the issuance of its long-awaited “volcano bonds”, BTC Bonds.
They were originally scheduled to launch in March 2022. But the country chose to delay the planned $1 billion offering, which was supposed to fund “BTC City”. The delay came after the market turmoil, according to Finance Minister Alejandro Zelaya.
The bonds are widely seen as one of the country’s last hopes of securing financing. The International Monetary Fund (IMF) has expressed concern about the sustainability of the BTC experiment in the country.
Likewise, the World Bank refused to help El Salvador with its BTC adoption plans.
The Central American nation has an $800 million bond due in January 2023. In July 2021, rating agency Moody’s downgraded the country’s debt rating to CAA1. This means that it is considered to be at risk of default on loans.
Public perception is also deteriorating. After all, Bukele trades BTC on behalf of El Salvador on his cell phone.
“Do you have financing needs and use people’s money to trade Bitcoins? What is the strategy?”, asked Nathalie Marshik.
