El Salvador Nayib Bukele announced they will continue their Bitcoin purchases in his recent tweet. President Nayib Bukele wrote: “We are buying one Bitcoin every day starting tomorrow”, but he didn’t reveal for how long the purchasing program would go on.
We are buying one #Bitcoin every day starting tomorrow.
— Nayib Bukele (@nayibbukele) November 17, 2022
El Salvador’s Bitcoin Law took effect last year on September 7, 2021. The country has bought nearly $375 million worth of Bitcoins, but as of now is unrealized paper losses totaling more than $60 million.
Despite the fact that President Nayib Bukele has received countless warnings from organizations such as the IMF and World Bank, he remains a strong advocate for Bitcoin. He believes cryptocurrency would be good not only for himself, but also for the country’s economy as a whole.
Over the past year, BTC’s price decline has dealt a severe blow to El Salvador. Last week’s FTX episode also added intense selling pressure to BTC. Despite this, President Nayib Bukele is confident enough in Bitcoin to make long-term purchases.
President Nayib Bukele has not only been acquiring Bitcoins, but he is working on establishing an infrastructure that would allow for a Bitcoin economy. He also shared plans of issuing bonds denominated in Bitcoin and creating an entire city whose currency would be Bitcoin; however, these plans have yet to come to fruition.
So far, President Bukele’s Bitcoin-based volcano bonds haven’t been very successful in repaying the country’s debt, according to Luis Membraño, a Salvadoran economist.
“If Bukele dreamed that he could create a different and innovative political economy, against the advice of the IMF, that dream has failed. There are no easy alternatives, no short-cuts.”
El Salvador’s credit rating has been downgraded by every major agency due to its plans concerning Bitcoin, and Fitch expects the country will default on its debt next January. Additionally, factors such as an impending recession, increasing inflation rates, and a worsening fiscal situation are likely to damage the economy even further.
Economist Membraño stated that El Salvador could become financially obligated to China if it requested debt financing from them, totally realigning the country’s foreign policy.