What Is the Current State of El Salvador after Bitcoin Fell Below $30,000?
2022-05-19 15:24:50
Will El Salvador's Public Debt Rise To 96% Of Its GDP By 2026?
The cryptocurrency market has taken a big turn for the worse in the past two weeks, with many tokens starting to show declines. The price of TerraUST, a stable coin supposedly pegged to the U.S. dollar, suddenly plummeted, along with its sister token LUNA. Both tokens have been gradually withdrawn from trading on some exchanges until now.
During this period of cryptocurrency instability, Bitcoin saw a 2-week decline, even losing $26,000 on May 12 to a 16-month low, and has continued to show volatility since then. From the Gate.io International Digital Currency Exchange, the price of Bitcoin was $29,098.13 at the time of writing, down 3.0% in 24 hours with a volume of $26,630,249,477.
Along with the dramatic fluctuations in Bitcoin, the country in northern Central America, El Salvador, has suffered huge losses as a result. According to incomplete media statistics, the country's president, Nayib Bukele, spent a total of $105 million on Bitcoin after Sept. 7, 2021, but since the beginning of the year, the price of Bitcoin has fallen 45 percent, leaving El Salvador with a floating loss of about $40 million.
The losses incurred due to Bitcoin have added to the woes of a country with a deep debt crisis. Back in January 2022, the Executive Board of the International Monetary Fund (IMF) urged El Salvador to revoke Bitcoin's legal tender status, warning of the risks it poses in terms of financial stability, among other things. Under current policies, the IMF expects El Salvador's public debt to rise to 96% of its GDP by 2026.
According to a recent report released by the National Bureau of Economic Research, only 20% of the 1,800 Salvadoran households that participated in the survey continued to use the Bitcoin wallet Chivo after using the $30 Bitcoin government reward, and 40% of the downloads occurred when the Chivo wallet was launched last September, but almost none this year. For merchants, only 20 percent of respondents are willing to accept Bitcoin.
Arguably, the results of this poll are not far off from the poll taken last year when El Salvador announced the adoption of Bitcoin as legal tender. At that time, a poll conducted by the Universidad Centroamericana in El Salvador showed that about 70 percent of Salvadoran respondents "disagreed" or "strongly disagreed" with the use of Bitcoin.
It is mentioned that this round of cryptocurrency plunge is related to the Fed's continued acceleration of interest rate hikes and tapering. Against the backdrop of the Fed's rate hikes, the cryptocurrency Bitcoin price live came under pressure and there was a severe sell-off. The cryptocurrency market has no limit to the number of ups and downs, and cryptocurrencies are not as stable as traditional currencies, so they are often a "roller coaster". If El Salvador continues to make Bitcoin a national currency, the implications will be incalculable.
The cryptocurrency market has taken a big turn for the worse in the past two weeks, with many tokens starting to show declines. The price of TerraUST, a stable coin supposedly pegged to the U.S. dollar, suddenly plummeted, along with its sister token LUNA. Both tokens have been gradually withdrawn from trading on some exchanges until now.
During this period of cryptocurrency instability, Bitcoin saw a 2-week decline, even losing $26,000 on May 12 to a 16-month low, and has continued to show volatility since then. From the Gate.io International Digital Currency Exchange, the price of Bitcoin was $29,098.13 at the time of writing, down 3.0% in 24 hours with a volume of $26,630,249,477.
Along with the dramatic fluctuations in Bitcoin, the country in northern Central America, El Salvador, has suffered huge losses as a result. According to incomplete media statistics, the country's president, Nayib Bukele, spent a total of $105 million on Bitcoin after Sept. 7, 2021, but since the beginning of the year, the price of Bitcoin has fallen 45 percent, leaving El Salvador with a floating loss of about $40 million.
The losses incurred due to Bitcoin have added to the woes of a country with a deep debt crisis. Back in January 2022, the Executive Board of the International Monetary Fund (IMF) urged El Salvador to revoke Bitcoin's legal tender status, warning of the risks it poses in terms of financial stability, among other things. Under current policies, the IMF expects El Salvador's public debt to rise to 96% of its GDP by 2026.
According to a recent report released by the National Bureau of Economic Research, only 20% of the 1,800 Salvadoran households that participated in the survey continued to use the Bitcoin wallet Chivo after using the $30 Bitcoin government reward, and 40% of the downloads occurred when the Chivo wallet was launched last September, but almost none this year. For merchants, only 20 percent of respondents are willing to accept Bitcoin.
Arguably, the results of this poll are not far off from the poll taken last year when El Salvador announced the adoption of Bitcoin as legal tender. At that time, a poll conducted by the Universidad Centroamericana in El Salvador showed that about 70 percent of Salvadoran respondents "disagreed" or "strongly disagreed" with the use of Bitcoin.
It is mentioned that this round of cryptocurrency plunge is related to the Fed's continued acceleration of interest rate hikes and tapering. Against the backdrop of the Fed's rate hikes, the cryptocurrency Bitcoin price live came under pressure and there was a severe sell-off. The cryptocurrency market has no limit to the number of ups and downs, and cryptocurrencies are not as stable as traditional currencies, so they are often a "roller coaster". If El Salvador continues to make Bitcoin a national currency, the implications will be incalculable.
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