Sun. Sep 25th, 2022

El Salvador President Nayib Bukele took to Twitter on Sunday to reassure Bitcoin investors, claiming such investments are safe and will grow “immensely” after the bear market.

See related article: El Salvador’s Bitcoin adoption, one week on

Fast facts

  • “My advice: stop looking at the graph and enjoy life. If you invested in #BTC your investment is safe and its value will immensely grow after the bear market,” Bukele said on this verified Twitter handle. 
  • The value of the Central American country’s Bitcoin holdings have reportedly fallen by nearly half amid the current bear market.
  • Last week, El Salvador’s finance minister Alejandro Zelaya claimed the country’s Bitcoin exposure will have minimal impact on its fiscal health. 
  • “… when they say that El Salvador’s fiscal risk due to Bitcoin is very high, all it does is make me laugh, and I think any serious economist should do the same because it is an extremely superficial analysis and they speak from ignorance,” Zelaya said.
  • El Salvador’s total reserves in 2020 amounted to US$3.08 billion, according to estimates by the World Bank. 
  • That would put the value of the country’s unrealized losses related to their Bitcoin investments at US$40 million, or 1.3% of the estimated total reserves in 2020, Forkast’s calculations showed.
  • In late January, the International Monetary Fund (IMF) said El Salvador should dissolve the US$150 million trust fund it created when it made Bitcoin legal tender, returning any unused funds to its treasury.
  • The trust fund was created to allow the automatic conversion of Bitcoin to U.S. dollars to address concerns over the high price volatility in the crypto.
  • The IMF also recommended eliminating the US$30 incentive for use of the digital wallet “Chivo.” There could be benefits to the use of Chivo, but only using dollars, not Bitcoin, the Washington-based organization said.
  • “In the near-term the actual costs of implementing Chivo and operationalizing the Bitcoin law exceed potential benefits,” the IMF report said.

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