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¿El &039plan Bitcoin&039 de El Salvador realmente está dando resultados?

Today it is impossible to talk about El Salvador without mentioning bitcoin, and vice versa. Since the Central American country converted cryptocurrency into legal tender, there has been a permanent stir around that decision and the consequences —both positive and negative— that it could bring in the future. and everything goes hand in hand with the figure of the young salvadoran president nayib bukele.

Bitcoin began operating as a legal currency at par with the US dollar in El Salvador in September 2021; and although the measure has generated a lot of curiosity, there are still several issues that are not too clear in this story. among them, what results has the nation obtained since it began to buy the digital currency in quantities.

Reading: Cuánto cuesta un bitcoin en el salvador

In the last few hours, Bloomberg published a report analyzing the performance of the investment in bitcoin made so far by the Nayib Bukele government. the conclusion of the aforementioned media is that El Salvador has probably lost money, and there are reasons to think that said reading is accurate (the fall in the price of the crypto, without going any further); but it is also true that the plot has several grays that do not allow us to know with absolute precision what the panorama of this initiative is.

The report shows that from September 6 of last year to date, El Salvador has bought 1,391 bitcoins. It is worth noting that there are no public records of each purchase other than Nayib Bukele’s tweets reporting the transactions in his personal account. Until now, the Salvadoran authorities have carried out 8 transactions for an amount greater than 70 million dollars; that, according to the price of bitcoin at the time of each acquisition.

See also: How a Young Couple Failed to Launder Billions of Dollars in Stolen Bitcoin | The New Yorker

The largest purchase in a single day was on October 27: 420 bitcoins at an average value of $58,630 each, for a total investment of $24.6 million. the smallest was that of last December 21, the last of which there is mention, when the savior made 21 bitcoins in exchange for one million dollars, paying an estimated price of $49,258 for each one.

the price of bitcoin has not been an ally of el salvador in recent weeks

El Salvador | Bitcoin | Nayib Bukele

Cotización del Bitcoin en dólares de los últimos tres meses | Imagen: CoinMarketCap

Mientras la cotización del Bitcoin se mantuvo en alza, el plan cripto de El Salvador no sufrió mayores contratiempos. Recordemos que la criptomoneda alcanzó su máxima cotización en la historia el 10 de noviembre de 2021, cuando se comerció brevemente por 69.044 dólares. Algunos entusiastas de la comunidad bitcoiner estimaban que la cripto alcanzaría los 100 mil dólares antes de que terminara el año. Sin embargo dicha proyección no solo no se cumplió, sino que el precio del Bitcoin sufrió una dura baja que se acentuó en los primeros días del 2022 ($40,836.49 el 8 de enero), y desde entonces ha tratado de repuntar lentamente.

How much is the bitcoin worth that El Salvador has today, then? It’s hard to say, really. Assuming that the country still owns all the cryptocurrencies acquired, and taking the BTC price at the time of writing this article ($42,950, approximately), we would be talking about 59.7 million dollars. Thus, if we consider that more than 70 million were spent to buy them, the Central American nation has effectively lost money with this investment.

but we return to the above: there are many grays in this story. El Salvador has drawn up a plan to mine its own bitcoin using a farm that feeds on geothermal energy from a volcano; but until now it is unknown how much has been achieved with this method. In addition, since the addresses of the wallets that use the state have not yet been made public, it is impossible to audit the purchase or sale transactions. that is to say, citizens must trust that the arcades of their country have as much bitcoin as nayib bukele assures that they have.

Bloomberg indicates that Alejandro Zelaya, Minister of Finance of El Salvador, recently acknowledged that part of the Bitcoin purchased has been converted back into dollars, but without providing further details. For this reason, it is really impossible to make a really accurate final balance of what the cryptographic panorama of the country is.

they didn’t ‘buy the dip’ again

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when the bitcoin price started to drop after reaching its all-time high, bukele announced a couple of times that he was “buying the dip”; that is to say, that he took advantage of the drop in price to acquire more digital currencies knowing that its price would rise again. however, as we indicated above, no new purchases have been publicly mentioned since December 21, even when the price of the crypto asset recently touched $40,000. a situation that is less striking, especially if the strategy is to keep bitcoin safe in the long term (“hodle”, as they say in the environment).

let’s also remember that el salvador announced fines last year some really daring plans to deepen its relationship with bitcoin. On the one hand, the creation of the bitcoin city was announced, a city based on the use of cryptocurrency in which it is promised that no taxes will be charged, with the exception of VAT. and a bond of one billion dollars will also be issued, at 10 years and with a coupon of 6.5%; the intention is to use half of said amount to buy more btc, and the rest for infrastructure expenses.

On the other hand, in recent months social networks have seen a sharp increase in complaints and reports from Salvadoran citizens about the disappearance of the bitcoin they kept in a goat wallet, the state digital wallet. meanwhile, nayib bukele has starred in several crossovers via twitter with opponents of his economic plan; and has even trolled the media who raise doubts about his plan.

of course the plan of el salvador has its logical root. cryptocurrencies have become an answer for many people who live in countries where the economy is always on the verge of collapse; either to escape rampant inflation or as a long-term store of value. however, the use of public funds to invest them in an asset as volatile as bitcoin raises doubts that they are also valid; and the lack of official information does not collaborate in terms of transparency.

The success of the bukele initiative will always be tied to the state of the market and how it will affect the price of bitcoin. If the price reverses its current state and rises to new all-time highs, there will be no shortage of optimists to support the project; The important thing will be to analyze the reactions of both the authorities and the citizens if there are times of great turbulence that do not allow them to look beyond the negative impact on their daily economy.

See also: 5 Best Bitcoin Casinos and Crypto Gambling Sites in 2022

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