Bitcoin for financial independence and for the inclusion of the poor in the banking system. With these promises, El Salvador’s President Nayib Bukele made BTC the official national currency last September. But while the BTC price is stumbling, concerns are growing about a Salvadoran national bankruptcy.
As of June 14, the price of the key crypto currency was temporarily at 21,047 US dollars – a new low for the year. Hodlers are concerned about their facilities. How is the state doing, which is said to own a proud 2301 Bitcoin? El Salvador is said to have lost an estimated 40 million US dollars on its crypto investment so far. The BTC price has halved since September 2021. But at least Finance Minister Alejandro Zelaya has recently shown himself to be calm. Noisy Reuters the politician explained at a press conference on June 14:
When I am told that El Salvador’s budgetary risk is really high because of Bitcoin, I can only smile. The household risk is extremely low.
The lost 40 million US dollars would therefore only account for 0.5 percent of the national budget. But whether El Salvador’s finances are really doing so well is a matter of great debate.
Bukele gambles on his smartphone
A central point of contention is Nayib Bukele himself. The President loves self-portrayal and Twitter. There he also likes to state that he buys more Bitcoin via smartphone – of course at the expense of the state budget. Bukele also bought the dip like this in May. For his country, he acquired 500 Bitcoin at an average price of $30,744. as Bloomberg Bukele in January as the only head of state who trades public funds on his mobile phone, Bukele went one better: he did it naked, added the President added.
Such bullish statements caused sympathy in the crypto community. Bukele’s authoritarian style of government is controversial. Critics accuse him of abolishing the democratic separation of powers. This causes trouble with the USA and the International Monetary Fund (IMF) is anything but impressed by Bukele’s Bitcoin course. Loan negotiations in January failed, with enormous debt repayments due for El Salvador in 2023.
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El Salvador’s bitcoin projects are on hold
It remains to be seen that the country has hardly been able to implement its own crypto plans so far. Due to the falling Bitcoin price, the introduction of the planned BTC government bond has been postponed indefinitely. So far, there is only a golden model of the crypto city that is to be financed with it.
A study of National Bureau of Economic Research also showed that BTC adoption in the country is not really progressing. Particularly bitter: the inhabitants of El Salvador receive 6 billion US dollars from abroad every year – the majority of which comes from the USA. Bitcoin should have made such payments cheaper and easier. But loud NZZ Bukele’s promise was not fulfilled either. Because the recipients exchange their received BTC back into US dollars and there are no high fees.
This may already indicate that if Bukele has gambled, the population will have to pay for this mess.
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