Bitcoin’s plunge deepens anxiety over El Salvador’s debt

President Bukele jokes about purchasing more Bitcoin after crypto tumbles

Flag of El Salvador                                 
The value of El Salvador’s Bitcoin holding has dropped below $50m – Photo: Shutterstock
                                

As Bitcoin continued to tumble on Wednesday, falling by a further 4%, anxiety continued to mount as to how the crypto’s decline would affect El Salvador’s debt crisis. 

El Salvador

The Central American nation adopted the prominent cryptocurrency as legal tender just over a year ago, and embarked on an ambitious plan to become a global hub for the then-burgeoning industry. 

President Nayib Bukele spearheaded the effort, overseeing the purchase of 2,301 Bitcoins and the drawing-up of plans for an innovative Bitcoin bond issuance. 

With Bitcoin having now lost 68.8% of its value since the $68,789 all-time high that it enjoyed last November, the bond issuance has been delayed twice. 

Having once been worth over $100m, the value of El Salvador’s Bitcoin holding stood at $49.6m on Wednesday afternoon. 

This month, S&P Global Ratings downgraded El Salvador’s debt rating to CCC+, classing it alongside Argentina and Ukraine. Indeed, with an $800m sovereign bond coming due in January, El Salvador’s dollar debt is the worst-performing in Latin America this year. 

President Bukele

In February, the US Senate Committee on Foreign Relations introduced legislation to evaluate and mitigate the risk posed by El Salvador’s adoption of Bitcoin as legal tender to the US financial system. 

In response, President Bukele stated:

Despite the value of Bitcoin having halved in the succeeding months, President Bukele has continued his pugnacious and provocative approach to social media. 

After his finance minister Alejandro Zelaya told journalists that the fiscal risk to the country posed by Bitcoin’s recent slump “is extremely minimal,” Bukele joked: 

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