El Salvador loses half its investment in Bitcoin as crypto plunges. It seems like President Bukele has gambled away taxpayer money.
Many Bitcoin holders are now kicking themselves. Who wouldn’t be in dispair seeing crypto investment plunging off a cliff?
But your loss maybe nothing compared to those people who invested with Terra’s UST and LUNA in May. You should not forget about that.
And if it doesn’t feel better now, think of an another kind of loss. Like the one in El Salvador where half of Bitcoin investment is gone now.
El Salvador and Bitcoin dream
El Salvador’s president, Nayib Bukele, is a big crypto bro. Thanks to him El Salvador has invested big into Bitcoin.
To be precise, El Salvadorian taxpayers have invested in Bitcoin because that’s whose money the government used to buy Bitcoin.
And look what happened.
As of June 13, 2022, El Salvador’s Bitcoin investments are worth roughly half what Bukele paid.
El Salvador government has bought the dip twice. In October 2021 when the price of Bitcoin was merely at $60,300. And in May 2022 at a far more acceptable $30,700.
As of now, Bitcoin is around $23,000 and continuing to fall.
This means that as of now, every purchase Bukele made was a loser.
What amount El Salvador owns now?
The country of El Salvador currently holds 2,301 Bitcoin, valued around $53 million at the time of publishing. That’s around 50 percent of the $105.6 million that Bukele invested.
The crypto market has tanked over the past month and a half, plagued by a series of events like the failure of the stablecoin Terra and the insolvency of a major DeFi lender, Celsius. Basically, anyone who discovered Bitcoin over the past 18 months and decided to invest (see: the mainstream public) is currently underwater.
This is obviously not good news for El Salvador, a country that was already facing financial turmoil. Bukele went all-in on Bitcoin, hedging his bets and even working to make El Salvador the first country in the world to accept Bitcoin as legal tender in September 2021.
What happens next?
Shockingly, Bitcoin did not solve El Salvador’s problems. Bukele, who has been described as an authoritarian by his critics, has still had to deal with the issues facing his country, such as a violent crime wave that led to Bukele jailing 2 percent of El Salvador’s adult population. On top of all that, he’s had to deal with protests, which were blowback from the Bitcoin laws he helped create.
The falling crypto market hasn’t changed Bukele’s mind on Bitcoin either. Bukele had planned to issue “volcano bonds” in order to raise funds, which would have been used to create a “Bitcoin city.” However, the bonds, which were supposed to launch in March, have since been postponed due to, well, the current crypto market conditions.
Now, it’s true that Bukele won’t have technically lost anything until he sells. Maybe if he keeps hodling, they’ll recoup some of the money he’s down. But time is not on El Salvador’s side. Thanks in part to these failed Bitcoin experiments, El Salvador looks like it may possibly default.
The apparent lesson is that, shockingly, gambling away taxpayer money on highly speculative crypto investments is not a good way to run a country.