Last June 2021 savior She became the center of attention after her adoption Bitcoin as legal tender. At that time, it was a file Cryptocurrency It was at levels very similar to the current levels, as it just exceeded 30 thousand dollars (28,338 euros). However, the problem with this adoption is reflected in a possible non-payment of a bond worth 800 million dollars (755 million euros) that expires in January 2023.
In February this year, International Monetary Fund He has already confirmed the following: “The adoption of bitcoin as legal tender is entirely financed by public money, through a trust. If the Bitcoin price collapses, trust resources may quickly dry up. To continue to ensure convertibility between bitcoin and the US dollar, the government must fund the trust with additional resources or by issuing debt.”
This is exactly what is happening today. Although El Salvador’s adoption of bitcoin wasn’t in June, it wasn’t until September that the country bought its first bitcoins. At that time, the price ranged between 46 thousand and 53 thousand dollars (43,450 euros and 50 thousand euros) compared to 33 thousand (31 thousand euros) now.
With all this situation, Debt prices in El Salvador fell by more than 15% during the month of April, a situation surpassed only by Ukraine. Ratings firm Fitch Ratings downgraded the debt rating to CCC, the worst possible rating. It doesn’t just stop El Salvador has complicated access to the credit market in order to finance itself, but it puts the country on the ropes. In fact, investors fear default in the above-mentioned bonds.
On the other side, Negotiations with the International Monetary Fund for a new loan have stalled as the agency urges El Salvador to abandon this transition to a crypto economy. At the moment, the American state Shell decided to issue the so-called “volcanic bond”, which was to be issued using blockchain Those whose profits would have gone to buy more bitcoin. In addition, this whole situation is causing a lot of social tension against the head of state, Neb Bukele, who is defending Bitcoin after he received 500 coins at $ 30,744 (€29,163.5) each, almost 55% below the maximum value. Registered with cryptocurrency. .
El Salvador just bought a dip! 🇸🇻
500 coins with an average US dollar price of about 30,744 USD# bitcoin
– Neb Bukele (@nayibbukele) May 9, 2022
Bukele has confirmed that he will continue his plan to issue $1,000 million (949 million euros) in Bitcoin bonds to fund the construction of Bitcoin City, a tax-free space he hopes to develop on the country’s coast. However, dollar bonds in the Central American country seem to be living a reality parallel to the president’s plans.
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