Wednesday, May 18

El Salvador’s Bitcoin Reserves Lose About 25% of Their Value After Crypto Market Crash – DiarioBitcoin


For Angel Di Matteo @shadowargel

The fall in prices of Bitcoin have made the 1,801 BTC that El Salvador manages in its reserves are currently worth about USD $65.6 million, a figure that is below the USD $88.4 million originally invested.

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A recently published survey reveals that, although the drop seen in the price of Bitcoin negatively affected the investors of the main digital currency, one of the most affected has been precisely the government of El Salvador, which has seen the value of its assets significantly reduced. BTC purchased since last year.

Fall in the price of Bitcoin and reserves of El Salvador

According to information shared by the president of El Salvador, Nayib Bukele, to date the country has a total of 1,801 Bitcoin acquired in recent months, for which a total of USD $88.4 million has been invested to date. By dividing the total BTC Between the amount invested, this would result in an average of USD $49,100 per unit, but this figure is well above the USD $36,440 that the market reflects as a price at the time of publication.

If we multiply the current price of Bitcoin times the amount the country has in reserve, this gives $65.6 million in total assets. This figure reflects losses of USD $22.8 million, equivalent to almost 25% of the global amount. Said figure is adjusted if the government of El Salvador to date maintains all those 1,801 BTC, since it is not known if he has sold part of them to finance some other program or initiative, such as the funds granted to users of the national wallet Goat.

According to the reports published by Bukele himself through his messages on Twitter, The investment was made as follows:

  • USD $35 million invested in September 2021, for which 700 BTC.
  • A month later, another 240 were purchased. BTC paying close to USD $59,000 per unit.
  • At the end of November, about USD $54,000 per unit was paid to add another 100 BTC.
  • Another 171 were bought in December BTC.
  • And finally, in the most recent purchase, USD $15 million was invested to buy 410 BTC.

rejection of Bitcoin e “crypto winter”

The situation represents a tough bet at this time for Bukele and the government of El Salvador, since the adoption of Bitcoin faced rejection from both inside and outside the Central American country. Internally, the opposition parties have expressed their disagreement with this measure from the moment of its announcement, which even led to civil protests that led to the destruction of some points and ATMs. Goat, while on the international scene, organizations such as the International Monetary Fund They have spoken out to discredit that decision and warn other nations not to go down that path.

However, the heaviest thing is that all this occurs at a time when the market seems to be going down without clear support, a situation that many analysts describe as the beginning of a period of “crypto winter”.

Unlike other times when prices have fallen sharply, there is currently a lot of uncertainty in relation to macroeconomic indicators, mainly associated with the US economy and the possible measures to be implemented by the Federal Reserve (FED) to address the growing inflationary levels that affect the dollar, the main reserve currency for many countries in the world.

On the other hand, political tempers are also heated in light of possible war conflicts between Russia and Ukraine, which anticipates a scenario in which several countries – including the US – could participate.

Promising future / Uncertain present

Despite everything mentioned above, analysts and enthusiasts remain firm in the thesis of Bitcoin as the new digital gold, so it is believed that in the coming years it could appreciate and become a world reserve currency thanks to its technological properties and its scheduled scarcity.

However, it is currently very difficult to know when the downtrend that shakes so much will end. Bitcoin as well as the crypto market in general. The readings at the moment are very bearish in the short term, projecting that prices could fall further and approach $30,000 per unit for the top cryptocurrency.

For their part, others have their expectations set on crypto whales, which apparently are waiting for a very good time to make their move and buy after the drop seen in recent months. Let us remember that the digital currency reached highs close to USD $70,000 per unit, and at the time of publication it is almost 50% below said values.

As for El Salvador, this seems like a stress test for President Bukele and his government, which remains firm in its perception towards Bitcoin despite the poor results seen throughout January. It remains to be seen what the president will do if prices continue to fall, and if the situation manages to turn around before it becomes unsustainable for the finances of the Central American country.


Recommended reading


Fountain: CryptoBriefing, CryptoMarkets

Angel Di Matteo version / DailyBitcoin

Picture of Unsplash

WARNING: This is an informative article. DiarioBitcoin is a means of communication, it does not promote, endorse or recommend any investment in particular. It is worth noting that investments in crypto assets are not regulated in some countries. May not be suitable for retail investors as the full amount invested could be lost. Check the laws of your country before investing.





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