El Salvador’s president predicts that Bitcoin investments will increase “enormously”
El Salvador’s president, Nayib Bukele, went to Twitter on Sunday to encourage Bitcoin investors, asserting that such investments are secure and will “explode” after the down market.
“My recommendation is to quit staring at the graph and enjoy life. If you’ve invested in #BTC, your money is secure, and its value will skyrocket after the bear market,” Bukele said on this verified Twitter account.
El Salvador apparently purchased 200 Bitcoin before introducing the cryptocurrency as official cash in September of last year, despite significant opposition. The last recorded ownership included 2,301 Bitcoin. During the current bear market, the country’s Bitcoin assets have allegedly lost over half of their value.
Last Monday, El Salvador’s finance minister Alejandro Zelaya said that the country’s exposure to Bitcoin would have a negligible effect on its fiscal health. “…when they suggest that El Salvador’s fiscal risk due to Bitcoin is extraordinarily high, it makes me laugh, and I believe any real economist should do the same because it’s an incredibly shallow analysis and they’re speaking from ignorance,” Zelaya added.
According to projections from the World Bank, El Salvador’s total reserves in 2020 amounted to $3.08 billion.
According to Forkast’s estimates, this would place the value of the country’s unrealized Bitcoin investment losses at $40 million, or 1.3% of the expected total reserves in 2020.
Late in January, the International Monetary Fund (IMF) recommended that El Salvador dissolve the $150 million trust fund it established when Bitcoin became legal cash and restore any unused assets to its government.
The trust fund was established to enable the automated conversion of Bitcoin to U.S. dollars in response to concerns about the cryptocurrency’s excessive price volatility. The IMF also suggested reducing the $30 incentive for using the “Chivo” digital wallet. There may be advantages to utilising Chivo, but only with dollars and not Bitcoin, claimed the Washington nonprofit.
The IMF research states that “immediately, the real expenses of adopting Chivo and operationalizing the Bitcoin legislation surpass the potential advantages.”