A bad run of form may deter other nation-states from following El Salvador’s lead and allowing Bitcoin as a mode of payment.
El Salvador is suffering big losses on its Bitcoin assets as a result of the recent market collapse. Due to the fact that its purchasing procedure and wallets are unknown, the actual quantity remains unclear. However, the loss is estimated to be between $10 million and $12 million.
El Salvador’s “Bitcoin experiment” was praised as groundbreaking in the sense that it paved the path for other nation-states to follow.
However, the losses reflect the inherent dangers associated with cryptocurrency investment. Even more so considering the magnitude of the transaction and the public way in which El Salvador conducted business. However, has any of this alarmed other nations enough to prevent them from accepting Bitcoin as legal tender?
When the decline continues to fall, El Salvador becomes the first sovereign country to use Bitcoin as legal money on September 7.
Prior to “going live,” and ever since, the decision has been met with fierce opposition from certain places. Including foreign bodies such as the International Monetary Fund, which warned it would stymie financing discussions. And private corporations, such as S&P Global and Moody’s, have expressed concern about the credit rating implications.
This is made worse by the Chivo Wallet’s teething troubles. Some individuals have reported identity theft, while others have reported their Bitcoin balance inexplicably vanishes. Despite this, President Bukele remains steadfast in his support for the Bitcoin experiment.
President Bukele has been tweeting examples of buying the dip since September. El Salvador is said to own 1,391 BTC, which cost $73.2 million to acquire.
However, at current prices, the assets are at $59 million, representing a $14 million loss – far more than prior predictions owing to Bitcoin’s continued drop.
Last Monday, Finance Minister Alejandro Zelaya said that El Salvador had sold Bitcoin, although the exact date and amount were not disclosed.
President Bukele predicted Bitcoin would reach $100,000 this year prior to the recent dip. Additionally, he said that two other nation-states would use BTC as legal cash in 2022. However, he stayed mum on which nations will be included.
idelity Investments produced a research on future trends last week. They discussed El Salvador’s attitude to Bitcoin, which they see as a potential source of wealth and development.
According to Fidelity, if Bitcoin continues to perform well, more nations will be compelled to join El Salvador, even if they do not share the country’s worldview. The asset managers refer to this as “purchasing insurance.”
“As a result, we would not be shocked if more sovereign nation governments buy bitcoin in 2022, and maybe even a central bank.”
Also Read: Solana ($SOL) Could Become The ‘Visa’ Of Cryptocurrencies, According To A Bank Of America Analyst
Wallets