Connect your future to bitcoin it can be very expensive Savior. President’s decision Nayib BukeleCombining the unpredictability of markets with a financial fashion like cryptocurrencies has been experiencing the first results in the country’s near future in recent months. With virtual currency’s value falling by more than 50% adds to the uncertainty created by virtual currency. The invasion of Ukraine, which has only worsened the prospects of one of Central America’s poorest countries, flooding the markets with rising inflation and rising interest rates. El Salvador risks defaulting on its debt, which could reach 86.9% of its GDP this year if it insists on Bitcoin as a legal tender, against the market’s view.
That’s what the rating agencies are saying, for example, Fitch, which gave it its lowest rating in February, and more recently, Moody’s, which issued a warning in its final May report. “significant risk” of debt default. There is some doubt as to its financial viability, due to the fact that the price of government-issued bonds is listed at 40% of its original value in line with the depreciation, resulting in greater reliance on short-term debt. Bitcoin, which has experienced a historical decline for six months,
Still, the president seems determined to keep his bet, even if he doesn’t double it. He announced it on his Twitter account just last night. buy 500 bitcoins For more than $15 million in public money, i.e. $30,744 each. Peaking in November 2021, Bitcoin was worth $68,000 at the time El Salvador, a country where it’s estimated that only half of its residents have access to the internet, made a stronger bet for the trendy cryptocurrency.
But the times Bukele chose could not have been worse.. At the end of last year, when he announced that he had formed a bond 1 billion dollars In conjunction with Bitcoin, he hoped to be able to dedicate, in equal parts, half to reinvesting in cryptocurrency and the other to building a ‘crypto’ city that would be powered by cryptocurrency. Conchagua volcano to continue ‘mining’ digital currencies.
The bond, which is expected to be issued in mid-March, has not yet been issued as the president. waiting for the so-called currency to recover. This dream, which should have been far away given the country’s economic prospects, is still alive in the mind of the president, who just hours ago shared the urban planning of the ‘beautiful Bitcoin City’ to show the project progressing.
Since the beginning of the year, that is, before the war begins in Europe, the International Monetary Fund has warned Bukele that the country should stop linking its future to the future of cryptocurrency. However, the 40-year-old young president, who carries ‘crypto’ as the flag of his economic policy, continues to advocate digital currency. in October after Bitcoin is a legal tender in the country alongside the US dollar, invested 25 million and now bought another 15 million. The exact figure is not official, but it is estimated that El Salvador has now accumulated more than 2,300 bitcoins.
If the 0.5 percent rise in interest rates in the United States had severely impacted the riskiest financial assets such as cryptocurrencies, the prospect of a rise to 0.75 percent already on the table could worsen El Salvador’s prospects.
If the 0.5 percent rise in interest rates in the United States had severely impacted the riskiest financial assets such as cryptocurrencies, the prospect of a rise to 0.75 percent already on the table could worsen El Salvador’s prospects.
Source: Informacion
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