The Nayib Bukele tracker, which records each purchase the nation makes along with its cost basis and total reserves, has purchased 2,301 Bitcoins at $45,000, for a total cost of $104.6 million. As of Wednesday, the price of Bitcoin is around $22,000. El Salvador’s reserves have lost 51% of their value and are worth $51.6 million. Despite the crash, Finance Minister Alejandro Zelaya showed few worries about the drop.
“When they tell me that the fiscal risk for El Salvador because of Bitcoin is really high, the only thing I can do is smile. The fiscal risk is extremely minimal,” Zelaya said.
El Salvador became the first nation to adopt a cryptocurrency as legal tender in June 2021. The poverty-stricken nation hoped to open up greater access to alternative forms of finance for its citizens, as 70% of Salvadorans do not have a bank account.
The move brought both warnings and praise from domestic and international institutions. In September 2021, Bitcoin experienced a 15% drop in value, but Salvadoran President Nayib Bukele did not stray from the country’s investment in the cryptocurrency. Instead, Bukele announced that the country bought 150 more coins.
“Buying the dip. 150 new coins added,” Bukele tweeted.
In January, the International Monetary Fund recommended that El Salvador liquidate its Bitcoin holdings and drop the cryptocurrency as legal tender. However, the Latin American nation was not deterred and rebuked the IMF’s recommendation. “No international organization is going to make us do anything, anything at all,” Zelaya said.
Bukele’s government envisions a “Bitcoin City” that will be partly financed by Bitcoin bonds. A golden model of the city was released last month, and the city would rest underneath the shadow of a volcano. Bukele envisions the city as being a tax haven but has not specified when or how the city would be constructed.
El Salvador’s cryptocurrency troubles come as the market struggles across the globe. Tesla, which bought $1.5 billion worth of cryptocurrency in 2021, has reportedly seen all of its gains wiped out in the crash.