Bitcoin and El Salvador much stronger together. Almost two years after El Salvador bravely made Bitcoin (BTC) its national currency, the catastrophic predictions of the International Monetary Fund (IMF) have not always not realized. Everything is even going rather well for the small Central American country. His government bonds even turned upside down, here too, the exact opposite of what some bond market forecasters had predicted.
Their morbid predictions for El Salvador have completely failed
Supranational financial institutions and rating agencies all said it heartily the day after September 7, 2021: the adoption of Bitcoin as legal tender in El Salvador marked the inevitable death of bonds of this Central American nation.
The rating agency Fitch Ratings had even downgraded El Salvador’s rating in September 2022. In its eyes, its obligations were only “junk bonds” (the worst rating), judged hyper-speculative, because very risky. Fitch experts even claimed that the country would make a non-payment in January 2023.
However, at that date, we noticed that little Salvador was perfectly able to repay the $800 million bond he had to, in due time. And bond market investors are clearly not hesitating to buy Salvadoran bonds.
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Did Bitcoin’s Health in 2023 Help Salvadoran Bonds?
Indeed, as CoinDesk reports in particular, these sustained purchases even led to a rise in bonds of state of El Salvador. According to market data from TradingView, it offers a hefty return on investment of 62% since the beginning of 2023.
It must be said that, at the same time, the bitcoin price has progressed by nearly 80% since January. And the crossed fates of Salvadoran bonds and the king of crypto are not likely to separate any time soon, given the ambitions of the nation of President Nayib Bukele.
Indeed, the Central American country still intends to issue for $1 billion in volcano bonds (also called Volcano tokens): government bonds based for the first time on Bitcoin. To this end, El Salvador has moreover adopted its Law on the issuance of crypto-assets in January 2023. You remember ? This is the month when the country had to “fail”, like an additional snub to the birds of misfortune.
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