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El Salvador’s minister dismisses Bitcoin crash despite 50% loss in reserves

Despite El Salvador being at a $50 million loss with their Bitcoin investment, the country’s Finance Minister Alejandro Zelaya refuses to acknowledge it, claiming the losses are “fake and don’t count”.
Since September 2021, when El Salvador first made Bitcoin legal tender, they have acquired over 2,300 Bitcoin at different prices. Almost all of their purchases have been followed by significant downturns, and they’ve rarely ever been in profit on their investments.
Despite the country clearly having made risky and regrettable investment decisions, the country’s finance minister Zelaya denies it, saying:
“When they tell me that the fiscal risk for El Salvador because of Bitcoin is really high, the only thing I can do is smile”
Bitcoin adoption in El Salvador
The International Monetary Fund (IMF) criticized El Salvador’s decision to accept Bitcoin as a legal tender and strongly advised against it. The IMF report listed the drawbacks of Bitcoin as:
“[Bitcoin] entails large risks for financial and market integrity, financial stability, and consumer protection. It also can create contingent liabilities.”
However, the country dismissed the IMF’s warnings. The country’s president and the finance minister are strong pro-Bitcoiners who believe Bitcoin is the future.
Moreover, they claim Bitcoin reduces the country’s dependence on the U.S. Dollar, which is El Salvador’s only other official currency. However, after several months, this has yet to happen.
El Salvador also recently announced they have “deployed capital to purchase another 12.4 bitcoins”.
The country essentially went from buying thousands, to buying double digits. Tell me your country is bankrupt without telling me your country is going bankrupt.
Future Plans
In a desperate attempt to increase the declining Bitcoin adoption in the county, El Salvador claims they are building a “Bitcoin City.”
The architectural model of the city shows that it will be placed near the Conchagua Volcano, taking up most of the hills. The city will also have a hexagonal center, an airport, and various key landmarks.
The country says they started planning for the city as soon as it accepted Bitcoin as a legal tender in November 2021. El Salvador’s president posted the city’s model as an update in May 2022. For now, it is unknown when the construction will begin.
The geothermal energy the Conchagua Volcano provides will also apparently be utilized in sustainable Bitcoin mining.
Many citizens have voiced their doubts about this project as the government refuses to share insights on specifics of when it will be constructed, and finished, and its benefit for the country, especially since 98.5% of the country prefers using fiat to Bitcoin.
In my personal opinion, it is simply a marketing stunt, and will likely be “cancelled” or “delayed” indefinitely as the Bitcoin experiment collapses.
The Central African Republic
Following El Salvador’s footsteps, the Central African Republic (CAR) also adopted Bitcoin as a legal tender in April 2022.
The CAR’s President Faustin-Archange Touadéra expressed his fondness of Bitcoin and said:
“For us, the formal economy is no longer an option. An impenetrable bureaucracy keeps us stuck in systems that don’t give us the opportunity to be successful. Bitcoin opens a new path to a bright future.”
The IMF criticized  CAR’s decision immediately after accepting Bitcoin as a legal tender. The IMF raised similar concerns to those it raised to El Salvador regarding volatility and integrity.
However, it wasn’t enough to convince CAR to revoke its decision. The country is currently working on establishing Africa’s first legal Bitcoin investment platform.
Do you think El Salvador is worried about being down $50 million on their investment, or are they really that confident that it will return to all-time highs again so they can make a profit? Share below!
In my opinion, they are extremely scared and will try to find more tactics in a desperate attempt to boost prices.
Thank you all for reading!
I have lots of more articles coming, stay tuned!
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