Bitcoin treads water despite El Salvador endorsement

President of El Salvador Nayib Bukele announces intention to make bitcoin legal tender

Bitcoin continued to tread water in the mid $30,000s on Monday, despite El Salvador’s President  Nayib Bukele announcing his intention to make it legal tender in his country.

If it comes to fruition, the move will constitute yet another significant milestone for the world’s first and largest cryptocurrency.

Unveiling his plan in a recorded message played at the Bitcoin 2021 conference that took place over the weekend in Miami, Bukele stated: “In the short term this will generate jobs and help provide financial inclusion to thousands outside the formal economy and in the medium and long term we hope that this small decision can help us push humanity at least a tiny bit in the right direction.”

Engine of financial inclusion

The 39-year old spoke of his desire “to design a country for the future” by looking for “the best examples of ideas from history and around the world,” adding: “I believe bitcoin could be one of these ideas.”

Addressing more than 2.5 million Twitter followers, Bukele outlined his belief that the adoption of bitcoin would bolster financial inclusion in El Salvador, highlighting the fact that almost three quarters of the nation’s population are unbanked and operate in the informal economy.

He also observed that, with bitcoin’s current market capitalisation of $680bn, “if 1% of it is invested in El Salvador, that would increase our GDP by 25%.”

Bukele outlined four key points to convince cryptocurrency investors and entrepreneurs to move to El Salvador, namely:

Opposition from “powerful interests”

If bitcoin does become legal tender, it will join the US dollar as one of El Salvador’s two official currencies.

The president recognised the likelihood of “some powerful interests” attempting “to make this historical #Bitcoin move fail,” but maintained that he will succeed.

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Although his approval rating domestically stands above 90%, Bukele has come in for criticism internationally for his opposition to recent US anti-corruption measures.

Anxiety over the health of El Salvador’s democracy increased in May when the Bukele-dominated Legislative Assembly voted to remove a number of Supreme Court judges and the nation’s Attorney General, both of which had criticised the president.

Market’s BTC response

Although potentially representing a seismic shift in its role on the geopolitical landscape and the first national milestone on the road towards a possible bitcoin standard, El Salvador’s likely adoption of the cryptocurrency has thus far failed to significantly bolster its price.

By mid-afternoon, Bitcoin continued to trade in the mid-$30,000s at $36,715.

Such a matter will likely be of little consequence to Bukele, who recently stated:

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