The sharp drop in the price of bitcoin (BTC) to USD 20,800, its lowest in 18 months, increased the discontent of some Salvadorans. Through Twitter, several inhabitants raised their voices expressing their anger against President Nayib Bukele for keeping part of the national reserves in cryptocurrency.
In this scenario, the Salvadoran journalist born in Spain, Roberto Valencia, said: “Imagine how those who bought bitcoin must feel today when it was at USD 60,000 (seven months ago). Well, if you’re Salvadoran, you don’t have to imagine it. With your money, 420 BTC were bought at that price in October 2021. An ‘investment’ of USD 25 million.
Accompanying this message, he shared a tweet from President Nayib Bukele from October of last year saying that they had bought bitcoin in the dip (the fall). At that time the cryptocurrency was close to its all-time high at $67,800, so such a decision has cost the government dearly, which now faces losses due to the drop in the price of BTC.
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El Salvador has lost 47% of the national reserves invested in bitcoin
El Salvador currently has 2,301 bitcoins valued at an average price of USD 44,189, according to Salvador Tracker. That means the government has invested $101,678,889 in the cryptocurrency and is currently in unrealized losses.
With BTC falling to $20,800, El Salvador’s reserves in the cryptocurrency equal $47,860,800. That is El Salvador registers an unrealized loss of USD 53,818,089 in bitcoin, which implies that they have lost 47% of what they have invested.
Although other sources estimate that the average price of the bitcoins that El Salvador accumulates is USD 47,434. For this reason, they maintain that the unrealized losses are now greater, above 50%. Faced with this situation, the councilor of the Mayor’s Office of San Salvador Héctor Silva commented about this: “millions in the trash on a presidential whim.”
However, it is worth clarifying that El Salvador has not sold its bitcoin reserves and plans to hold them in the long term. That is, if the price of BTC rises to a value greater than what they bought, their funds will grow. This is the goal to which the president aims Nayib Bukele, who for the moment has not commented on the hard fall that the cryptocurrency faces this week.
Bitcoin Crash Increases Uncertainty About El Salvador’s Plans
Another person who also showed his unhappy about the government’s decision to buy bitcoin It was the political scientist Ines Martínez, president of the NGO D’Politic of El Salvador that watches over democracy, human rights and active participation of citizens.
“He promised 50 schools ‘with the profits from bitcoin’, but all he did was lose more than USD 50 million to date, money from the Salvadoran people”, manifested outraged about the current BTC price drop.
As you show in your comment, the current bitcoin bear market generates uncertainty for the salvadoran population on how the government will deal with the public expenses that it had in place. In addition, the investment that they hoped to obtain with the issuance of the volcano funds has been suspended until the price of the cryptocurrency rises.
The concern also stems from other economic issues in the country. Almost a year after the government adopted bitcoin as legal tender, El Salvador has achieved low economic growth. Meanwhile, it has a large fiscal deficit and almost 90% of gross domestic product (GDP) in public debt.
The feeling of uncertainty and discontent perceived in the population adds to the results of the IudopUCA survey reported in CriptoNoticias this month. This reveals that the 71.1% of salvadorans consider that the Bitcoin Law has not benefited their family economywhich intensifies during the current bear market.