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El Salvador loses $50 M as cryptocurrency market crashes

InternationalEl Salvador loses $50 M as cryptocurrency market crashes

By Khaila Gentle

SAN SALVADOR, El Salvador, Thurs. June 16, 2022

With the rapid decline of the cryptocurrency market and a recent sharp drop in the value of Bitcoin, El Salvador has reportedly lost over fifty percent of what it invested in the market.

According to VICE News, El Salvador’s government purchased a total of 2,301 Bitcoins for $105.6 million. Those Bitcoin reserves, however, lost 51% of their value on Monday and are now only worth $51.6 million, representing a loss of more than fifty million dollars for the Central American nation.

Earlier, in January, the International Monetary Fund (IMF) had recommended that the country liquidate its Bitcoin reserves and fully abandon using the cryptocurrency as legal tender. The country’s government, however, outright refused.

Despite the possible threat that the cryptocurrency crash poses to the country’s economy, El Salvador’s government remains seemingly unperturbed. On Monday, Finance Minister Alejandro Zelaya said at a press conference that there is still an “extremely minimal” fiscal risk, noting that the decline in the value of Bitcoin does not represent more than 0.5% of the national budget.

In September 2021, El Salvador became the first country to accept Bitcoin as legal tender, amid much criticism from both inside and outside the nation.

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