More Stress For El Salvador As Bitcoin Dips To $29,000
20 Mai 2022 - 01:00AM
NEWSBTC
El Salvador has been on the radar of leading financial and economic
institutions since it made Bitcoin a legal tender. It has mainly
become a spectacle as cryptocurrency supporters and non-supporters
alike watch on to see how this plays out. El Salvador which had
made good on its bitcoin promise had made multiple BTC purchases at
close to the height of the market last year and some this year. The
country now holds at least 2,300 BTC since it made its first
purchase in September of 2021. Now that the price of Bitcoin is
down significantly since the country had begun buying, how is this
playing out for the North American country? El Salvador And Its
Bitcoin El Salvador had bought another 500 BTC in May after the
market had declined to $1.68 trillion. These bitcoins which were
purchased at an average price of $30,774 had brought the country’s
holdings to 2,301 BTC so far. It would be the lowest price that the
country had been able to purchase the digital asset and given that
this purchase was only a small part of its larger holdings, the
country still remains in loss from its multiple purchases. Related
Reading | Funding Rates Fall To Yearly Lows Following
Bitcoin’s Fall Below $29,000 The first time El Salvador had bought
some BTC in September, it had been trading above $44,000. What this
means is that the digital asset is down about 45% since then. Its
entire stash is now worth about $70 million at present prices. So
even with the dollar cost averaging method that has seen the
country buy BTC at different prices, it is still down 28% from its
total purchase value. BTC falls to $28,000 | Source: BTCUSD on
TradingView.com The move to accept BTC has not only proved
controversial on just the bitcoin price side, but it has also
affected the country’s ability to receive international aid in the
form of loans. Last year, it was made public that the country had
been looking to secure $1.3 billion from the IMF. However, this
does not seem likely to happen given that the IMF has expressed its
disdain for the adoption of bitcoin as a legal tender. It has
advised the country to remove the digital asset as an official
national currency, citing that this could cause problems for the
economy in the long-term, revealing that the current account
deficit for El Salvador’s remittance and the external
financing-reliant economy is estimated to drift around $2 billion
for the next three years. But President Nayib Bukele has turned a
deaf ear to this. Related Reading | Crypto Carnage Causes
Flight To Bitcoin Safe Haven, Dominance Demonstrates El Salvador is
a country that is heavily reliant on remittances from citizens
abroad who send money home to loved ones. For this reason, the
president has said that BTC will greatly help make these
remittances easier and cheaper for its residents. On the price
side, the president is not much bothered by the recent decline
either. He has said in the past that he expects the price of the
digital asset to reach $100,000 sometime in 2022. If this happens,
then the country will be in significant profit from its BTC
holdings. Featured image from Coingape, chart from TradingView.com
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