El Salvador is coming to terms with Bitcoin’s price drop below $30,000. The country, which first legalized BTC as the country’s currency, could therefore risk default with this collapse.
Bitcoin’s collapse below $30,000 and El Salvador’s risk of default
The Central American country that made Bitcoin (BTC) legal tender in September 2021 could now be at risk.
Bitcoin has lost more than 50% of its value in just six months, falling from its ATH of almost $65,000 six months ago, to the current $29,500.
Last week, the president of El Salvador, Nayib Bukele said he had bought 500 more BTC, following his ‘buy the dip’ strategy. This is the most substantial BTC purchase made by El Salvador to date.
As usual, his choice was criticized by many, most notably by Peter Schiff, a US stock broker, who tweeted the following:
When are you going to stop throwing taxpayers money away helping whales unload their #Bitcoin? The dips won't stop, so if you don't stop buying El Salvador won't stop losing.
— Peter Schiff (@PeterSchiff) May 13, 2022
“When are you going to stop throwing taxpayers money away helping whales unload their #Bitcoin? The dips won’t stop, so if you don’t stop buying El Salvador won’t stop losing”.
El Salvador could be at great risk as Bitcoin falls
While Bukele’s ‘buy the dip’ strategy continues, other matters have been postponed or changed, precisely because they are related to Bitcoin’s volatility.
Firstly, the volcano bonds, i.e. the government bonds in Bitcoin that were scheduled to debut on 15/20 March with high demand, have been postponed, with the next probable date by September.
Moreover, the rating agency Fitch in February downgraded El Salvador’s long-term issuer default rating from B- to CCC, citing political unpredictability and the adoption of Bitcoin as legal tender as some of the factors responsible for the downgrade.
Moreover, the population of the Central American country itself does not seem to totally appreciate crypto. In fact, only a small fraction concentrated in the educated, young and already users of traditional banking services have truly adopted Bitcoin.
Nayib Bukele and Michael Saylor are major BTC accumulators
Nonetheless, despite the delays and the realities of El Salvador and Bitcoin, President Bukele continues to behave in line with the BTC accumulation strategy, much like Microstrategy CEO Michael Saylor encourages to do.
A few days ago, Saylor, who has a fund under his belt of over 91,000 BTC, said that it is still worthwhile to invest in BTC.
Among other reasons, Saylor says Satoshi Nakamoto’s crypto is the best hedge against high inflation, which has reached 8.5% in the US, compared to 5% in Europe.
Meanwhile, Bukele shows the first images of Bitcoin City in El Salvador.
— Nayib Bukele (@nayibbukele) May 9, 2022