El Salvador Loses Half Of Its Investment In Bitcoin As Crypto Massively Crashes
President Nayib Bukele has invested $105.6 million into the cryptocurrency in an attempt to halt the country's economic slide.
El Salvador's investment into Bitcoin looks like being a disastrous financial failure after the value of the cryptocurrency continued to plummet.
The Central American country raised eyebrows in September last year when Bitcoin became a legal currency, having been approved last summer by its government.
The legislation means Bitcoin is equal to El Salvador's legal currency, which is the US dollar, and so can be used for cash payments. Businesses operating in the country were also told to accept payments in Bitcoin if they had the technology to do so.
Meanwhile, the country's president Nayib Bukele has long been a fan of the cryptocurrency and has repeatedly invested the country's money into it, around $105.6 million (£87m) in total.
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Bitcoin has been in decline for some weeks at this point, but Bukele was still buying new Bitcoin as recently as 9 May, when he proudly announced via Twitter that he'd purchased 500 coins at an average price per coin of $30,744 (£25,000).
Unfortunately, the current value of Bitcoin is down to around $18,500 and is showing no signs of arresting its slide.
If you look at El Salvador's investment into Bitcoin, not a single one of their nine purchases was made at an average coin price of that amount or lower, which means that every single investment they've made into the cryptocurrency has been a loss.
As a country, El Salvador currently holds 2,301 Bitcoin, valued around $50 million at the time of writing - that's around 50 percent Bukele's investment.
El Salvador has been struggling with its finances for a couple of years now, with its GDP on a steadfast decline and worth over $2 billion less than in 2019, according to latest World Bank figures.
Investing what money it has into Bitcoin has not gone down well with its citizens, but speaking at a press conference, the country's Finance Minister Alejandro Zelaya dismissed concerns over this latest blow to its economy.
He said: "When they tell me that the fiscal risk for El Salvador because of Bitcoin is really high, the only thing I can do is smile.
"The fiscal risk is extremely minimal."
Zelaya also cited an earlier estimate from Deutsche Welles that the El Salvador's Bitcoin portfolio had lost some $40 million in value.
"Forty million dollars does not even represent 0.5% of our national general budget," he said.
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Topics: Bitcoin, Money, Cryptocurrency
Simon Catling