El Salvador’s Bitcoin-strengthening president has asked people to be patient after the price of the crypto-currency dropped below $ 20,000 – less than half the price the government paid.
According to the tracking website nayibtracker.com, under President Nayib Bukele’s administration, El Salvador spent about $ 105 million on Bitcoin, starting in September last year and paying an average of almost $ 46,000 per coin.
The value of that investment in the currency, also known as “BTC”, is now estimated to have fallen by more than 57%, or about $ 61 million.
“I see that some people are worried or anxious about the #Bitcoins market price,” Bukele wrote on his Twitter account late Saturday. “My advice: stop looking at the chart and enjoy life. If you have invested in #BTC, your investment is safe and its value will grow tremendously after the bear market.”
“Patience is the key,” the president wrote.
On Tuesday, when a Bitcoin publication shouted that El Salvador had lost “only” $ 40 million on his investment, Bukele tweeted with apparent disbelief: “You’re telling me we should buy more #BTC?”
Bukele became the first leader in the world to make the cryptocurrency legal tender last year and was a committed driver at least until May, when he boasted to buy “the dip” in the currency’s price. But the coin has since slipped further.
No real loss, says minister
Finance Minister Alejandro Zelaya tried to put a good face on the situation in an interview with a local television station on Wednesday, saying that because El Salvador did not sell any of its Bitcoins, it did not really suffer any loss.
“When they tell me that El Salvador’s budget risk has increased because of the supposed loss, that loss does not exist,” Zelaya said. “It needs to be made clear, because we did not sell.”
Most companies and governments do write down the value of what accountants call an “unrealized loss”, even if they do not sell the fatal asset.
Zelaya also insisted that the Bitcoin chip does not matter much to El Salvador, saying, “It does not even represent 0.5% of our budget.”
It could be a hard sell in a country where about one-fifth of the people live on less than $ 5.50 a day.
In January, El Salvador rejected a recommendation by the International Monetary Fund to abandon Bitcoin as a legal tender.
Zelaya said at the time “no international organization is going to let us do anything, anything,” calling it a matter of “sovereignty.”
The IMF recommended that El Salvador dissolve the $ 150 million trust fund he created when he made the cryptocurrency legal tender and return any of those unused funds to his treasury.
The IMF has expressed concern about the volatility of Bitcoin prices and the possibility of criminals using the crypto-currency.
Bukele cited Bitcoin as a way to significantly increase financial inclusion, which has drawn millions of people who previously did not have bank accounts into the financial system. He also talked about the parallel tourism promotion that Bitcoin enthusiasts are targeting.
Bukele led the pressure to adopt Bitcoin as a legal tender along with the US dollar. El Salvador’s Legislative Assembly made the country the first to do so in June 2021.
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