El Salvador, which is continuously “fishing down” for Bitcoin, is losing heavily
According to the market price on the afternoon of Jan. 22, El Salvador is losing money after the last bitcoin bottom-fishing.
As of now, it looks like El Salvador’s Bitcoin (BTC) purchases are losing money. Previously, El Salvador President Nayib Bukele had repeatedly “undercut” Bitcoin and announced it on the official Twitter channel. The Central American country currently holds a total of 1,801 bitcoins. Possible loss 29.12 million dollars
The Central American country began buying cryptocurrencies in September after President Nayib Bukele approved legal tender for Bitcoin. Then, Bitcoin traded around $50,000.
This country keeps buying Bitcoin when the coin hit an all-time high, close 69,000 won U.S. dollar As of November, bitcoin has lost more than 49% of its value so far.
On the morning of January 22, El Salvador’s president announced that the country had bought 410 more bitcoins at a price of fifteen million dollars. Based on the timing of President Nayib Bukele’s post and the amount of purchases, El Salvador has bitcoin at around c. 36,600 U.S. dollar/BTC. According to the market price at 4 p.m. of the same day (Vietnam time), this bottom fishing caused the Central American country a loss of approx 205,000 won U.S. dollar only after 10 o’clock.
Mathematically, President Bukele’s purchases of cryptocurrencies resulted in the Central American country losing 29.12 million dollarsbased on an average purchase rate of 42,528 U.S. dollar/BTC.
Assuming the government of El Salvador holds all the bitcoins it buys, the country’s digital assets are currently floating around 64.29 million dollars.
The country’s financial situation continued to deteriorate as El Salvador’s government bonds depreciated. President Nayib Bukele’s inflexible economic policies and rapid experimentation with Bitcoin caused international investors to lose confidence in the Central American nation’s growth rate.
The detractors after the “bottom-fishing” days.
Having bought bitcoin many times when the price “collapsed,” Bukele has become a famous figure in the crypto investment community.
Aside from the praise, the President of El Salvador’s “bottom fishing” received mixed opinions from pundits.
Nayib Bukule has repeatedly taken issue with Bitcoin critics. El Salvador’s president called Johns Hopkins economist Steve Hanke “a fool” when he likened the Central American nation’s plan to mine Bitcoin using energy from volcanoes to a farce.
In Bukele’s Dec. 4 “bottom-fishing” post, Peter Schiff, CEO of Euro Pacific Capital Inc., said he believes mining Bitcoin could cause the Central American country to lose money. “There will be many more bottom formations to come. How much taxpayer money do you want to waste on the people of El Salvador?” Peter Schiff commented on the presidency.
Previously, the CEO of Euro Pacific Capital Inc. has repeatedly expressed concern about El Salvador’s Bitcoin bottom fishing. “It is worrying for the people of El Salvador. I wonder how many times they will buy before they cut their losses and sell these assets,” commented Peter Schiff on Nayib Bukele’s post.
El Salvador’s finance minister, Alejandro Zelaya, said the country was “making profits,” but didn’t elaborate. Currently, El Salvador’s bitcoin wallet address is still a mystery. The government says it has a $150 million fund at Bandesal Bank to support bitcoin transactions. Information about this investment fund is still unclear.
Natalie Marshik, head of emerging markets research at investment bank Stifel Nicolaus, predicts the country will be in deficit. First billion dollars for operating expenses in 2022.
“Salvador has a budget deficit. So where does the money to trade Bitcoin come from? The people of this country have reason to doubt the Bitcoin strategy. It’s hard to believe that any country’s government would risk taxpayers’ money with such a volatile asset,” Natalie said.
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