The president of El Salvador, Nayib Bukele, has bet big on bitcoin. This bet doesn’t look good right now.
Are you a bitcoin holder currently moping as you watch your cryptocurrency investment plummet?
Do not worry. It can always be worse. You could be El Salvador.
The President of El Salvador Nayib Bukele is a big crypto bro and he has invested heavily in Bitcoin. And when I say he invested in bitcoin, I mean Salvadoran taxpayers invested in bitcoin because that’s the money he used to buy bitcoin from.
As of June 13, 2022, bitcoin investments from El Salvador are worth roughly half of what Bukele paid.
El Salvador paid over $60,300 per bitcoin in October 2021, when Buekele “bought the dip” and acquired 420 bitcoins, the highest price per bitcoin he had paid. The lowest price was reached last month, on May 9, when Buekele again “bought the bottom” and acquired 500 bitcoins for over $30,700 each.
The current bitcoin price is around $23,000 and continues to decline. This means that from now on, every purchase was a loser. There has not been a single purchase made below the current value.
The country of El Salvador currently holds 2,301 bitcoins, worth around $53 million at press time. This represents approximately 50% of the $105.6 million invested by Bukele.
The cryptocurrency market has crashed over the past month and a half, weighed down by a series of events such as the failure of stablecoin Terra and the insolvency of major DeFi lender Celsius. Basically, everyone who discovered bitcoin in the last 18 months and decided to invest (see: the general public) is currently underwater.
This is obviously not good news for El Salvador, a country that was already facing financial turmoil. Bukele has been betting 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.
Shockingly, bitcoin did not solve El Salvador’s problems. Mr. Bukele, who has been described as authoritarian by his critics, has still had to deal with the problems facing his country, such as a violent crime wave that has led Mr. Bukele to imprison 2% of El Salvador’s adult population. . Additionally, he faced protests, which were the backlash of the bitcoin laws he helped create.
The fall in the cryptocurrency market hasn’t changed Bukele’s mind on bitcoin either. Bukele had planned to issue “volcano bonds” 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, current crypto market conditions.
Now, it’s true that Bukele technically won’t have lost anything until he sells. Maybe if he keeps playing, they’ll get back some of the money he lost. But time is not on El Salvador’s side. Thanks in part to these failed bitcoin experiments, El Salvador looks like it could fall short.
The apparent lesson is that, shockingly, gambling taxpayers’ money on highly speculative crypto investments is not a good way to run a country.