By
Bhushan Akolkar
April 16th, 2024
As the Bitcoin price crashes to $20,000, El Salvador’s total Bitcoin investment is down more than 50% under $50 million with the average BTC purchase price at $45,171.
The world’s largest cryptocurrency Bitcoin (BTC) has been under severe selling pressure this week. As of press time, BTC is trading another 10% down at a price of $20,500 with its market cap slipping under $400 billion. With today’s losses, Bitcoin is down more than 30% on the weekly chart. Amid this crash, El Salvador has seen the value of its Bitcoin investments erode by more than 50% but continues to deny any financial risks.
Last year, El Salvador made Bitcoin a legal tender and has been buying crypto as part of its treasury. The country holds more than 2,300 Bitcoin with a net investment value of $104 million. However, with the BTC price crash, the value of its investment has dropped to under $50 million.
Since September 2021, El Salvador has added Bitcoins at ten different instances. The average price of its 2,300 Bitcoin purchases stands anywhere close to $45,171. The country’s most recent Bitcoin purchase was last month when Bukele announced buying 500 BTC for a $15.3 million in total investment. Back then, Bitcoin was trading at $30,744 each.
The IMF has many times warned El Salvador about the financial risks of investing in Bitcoins. However, the Latin American country has been firm in its stand for the adoption of Bitcoin. El Salvador President Nayib Bukele believes that Bitcoin serves as an asset of financial freedom and will help the country reduce its debt significantly.
El Salvador Dismisses Rumors of Financial Risks
Just as the Bitcoin price collapses, there have been rumors that the fall could bring fragility to the country’s financial health. However, Finance Minister, Alejandro Zelaya, has dismissed the rumors assuring that the recent crash doesn’t pose any major risk. While speaking at a recent press conference, Zelaya said:
“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.”
By this Monday, El Salvador was facing around a $40 million loss on its Bitcoin investments. Forty million dollars does not even represent 0.5 percent of our national general budget,” said Zelaya.
Responding to this earlier today, El Salvador President Nayib Bukele took to Twitter wherein he said: “You’re telling me we should buy more BTC?” Well, this could also mean that President Bukele can announce a fresh Bitcoin purchase anytime soon.