Bitcoin Losses Add to Rising Fears of Default in El Salvador

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Alex Dovbnya

El Salvador will struggle to get rescue package from IMF

According to a recent report published by The Wall Street Journal, the market value of El Salvador’s assets has fallen by about a third.

The recent cryptocurrency crash has dramatically increased the likelihood of El Salvador defaulting on its debts.

El Salvador has spent more than $100 million building its Bitcoin fortune, which has now dwindled to just $38 million. The largest cryptocurrency plunged to $25,401 earlier this week, its lowest since December 2020.

The poverty-stricken country adopted Bitcoin as legal tender last September. Despite coercive measures requiring mandatory adoption, the largest cryptocurrency so far has failed to gain traction in El Salvador.

As reported by U.Today, a recent survey by the National Bureau of Economic Research (NBER) found that 80% of businesses had never touched Bitcoin.

Because of its Bitcoin gamble, El Salvador is unlikely to receive funding from the International Monetary Fund (IMF). The country was set to pay its $800 million bond in January. Earlier this month, Moody’s downgraded El Salvador’s rating to “junk.”

El Salvador had to postpone its much-hyped Bitcoin bonds because of the price.

President Nayib Bukele, who calls himself the “coolest dictator in the world,” has not soured Bitcoin, despite being ridiculed for making the impoverished nation even poorer with his ill-timed purchases. Earlier this week, he announced another purchase of 500 coins.

Fernando Mejía, a graphic designer from San Salvador, told the Wall Street Journal that Bitcoin actually did more damage.

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