Crypto crash could see El Salvador default on debt payments

[midian182]

In context: The crypto crash is impacting many holders of digital assets, from individuals who have lost their life savings to crypto-investing businesses. The collapse is also having an impact on El Salvador. The country, which made Bitcoin legal tender last year, is estimated to have lost around $40 million through the falling price of BTC.

Bitcoin became an official currency alongside the US dollar in El Salvador last year. The move has proved controversial: many citizens feared the volatility of BTC would make the country's economic problems even worse, and the government's wallet app has proved far from reliable. El Salvador also faced pushback from the World Bank and the International Monetary Fund (IMF) over its decision.

Things have become even worse in El Salvador due to this week's crypto crash that has seen almost $1 trillion wiped off cryptocurrency's market cap. Bloomberg writes that Bitcoin's 40% decline since late March means President Nayib Bukele's losses on BTC have reached around $40 million, and that has raised questions over whether the government will be able to meet its next debt payment—an $800 million Eurobond repayment due in January next year. Several international credit agencies have already downgraded El Salvador's credit rating to CCC, aka "junk."

El Pais notes that the IMF, which could help El Salvador meet its next foreign debt payment, has urged Bukele to drop Bitcoin as legal tender, complicating the country's relationship with the organization.

#Bitcoin City is coming along beautifully ❤️ pic.twitter.com/A6ay8aAREW

— Nayib Bukele (@nayibbukele) May 9, 2022

Bukele obviously isn't concerned that adopting Bitcoin as legal tender was a costly mistake. On May 9, he bought 500 more coins for $15.5 million. At the time of writing, their value is down by about $500,000. He also reminded people that Bitcoin City is coming along beautifully, apparently.

h/t: PC Gamer

Masthead credit: Useacoin

Permalink to story.

https://www.techspot.com/news/94577-crypto-crash-could-see-el-salvador-default-debt.html

 

[winjer]

Color me surprised....

 

[FaTaL]

Imagine that..

 

[Kam7r]

Well , that was unexpected....

 

[Nobina]

What crash? It's getting back up as always. I'd like it to stay down for enough time for people to start selling mining GPUs and then it can do whatever.

 

[Dimitriid]

Oh no worries, I'm sure it's clown of a president will find a way to blame "gangs" and jail even more people before he's run out of power.

 

[MyIOnU]

I bet he will move his bitcoin cities inside the metaverse

 

[Alexmx]

Must be nice playing crypto bro with the people's money...

 

[QuantumPhysics]

Naive Bukele

 

[wiyosaya]

Adopting bitcoin as legal tender comes with risks is an understatement. IMO, a better statement is adopting bitcoin as legal tender is abject foolishness.

 

[Uncle Al]

Just the first of many to come .....

 

[Geralt]

Poor country. Bad move and now horrible consequences. Who was the genius there who decided to join crapto?

 

[Squid Surprise]

Does anyone commenting on here actually understand how economics work?

Bitcoin isn't dead... it has "crashed" but will rebound (it has already begun doing that)...

El Salvador is a 3rd world country who had no stable currency before adopting Bitcoin. While the decline certainly isn't great, nations (even crappy ones like El Salvador) must think long term... Bitcoin will rise again and El Salvador will be the better for it.

 

[ZedRM]

This is what happens when a government puts stock in an extremely volatile type of market. El Salvador was premature in jumping into cryptocoin.

 

[BuckarooBonzaii]

What better way to crash a Country? Manipulation in crypto is easy because there are no regulations which makes it highly volatile. Crypto right now is like the Wild West where anything goes even to a point where the crypto exchanges can manipulate the prices to attract desirable investors.

The question is how many times will crypto crash before you start loosing because your average value is less than what you started? Rinse and repeat. Of course the Stock Market does this too but you can sell and buy a better performing stock to prop up your portfolio. Crashing crypto many times will be an easy way to make people poor.

 

[NightAntilli]

"500 more coins for $15.5 million. At the time of writing, their value is down by about $500,000."

That's a whole 3%. What a catastrophe... I'm sure that if he would have bought Netflix they would have been better off. Oh wait...

El Salvador will be one of the richest countries by 2030. Laugh at me all you want. You will remember this post in 2030.

 

[ZedRM]

El Salvador will be one of the richest countries by 2030. Laugh at me all you want. You will remember this post in 2030.

No, they won't, and no, we won't.

 

[Beerfloat]

What crash?

El Salvador will be one of the richest countries by 2030. Laugh at me all you want. You will remember this post in 2030.

I might actually remember these posts. We're way beyond alternative facts. These guys are in completely alternative realities.

 

[mattferg]

What better way to crash a Country? Manipulation in crypto is easy because there are no regulations which makes it highly volatile. Crypto right now is like the Wild West where anything goes even to a point where the crypto exchanges can manipulate the prices to attract desirable investors.

The question is how many times will crypto crash before you start loosing because your average value is less than what you started? Rinse and repeat. Of course the Stock Market does this too but you can sell and buy a better performing stock to prop up your portfolio. Crashing crypto many times will be an easy way to make people poor.

Do you know what you’re talking about? Like, at all? For these crashes to make things less and less it would have to crash lower each time. It doesn’t. It has a higher bottom. What you’re saying has literally never happened and shows you’ve done 0 research. This is a “crash” to $30,000, 3x the 2018 PEAK and nearly 10x the 2020 bottom.

 

[Beerfloat]

Do you know what you’re talking about? Like, at all?

Does anyone? This asset class is very new, it has no objective criteria for valuation, and most profits seem to go straight back into the same ecosystem, instead of the 'real' economy.

Who should we trust to make accurate predictions about investing in this? People who understand blockchain? Why?

 

[mattferg]

Does anyone? This asset class is very new, it has no objective criteria for valuation, and most profits seem to go straight back into the same ecosystem, instead of the 'real' economy.

Who should we trust to make accurate predictions about investing in this? People who understand blockchain? Why?

It’s been around 13 years and has never consistently “dipped lower and lower” so you eventually lose money. This literally doesn’t happen.

 

[bviktor]

Oh no!

Anyway...

 

[Nobina]

I might actually remember these posts. We're way beyond alternative facts. These guys are in completely alternative realities.

I was referring to Bitcoin swinging back to 30k from like 26k where it was before I made that comment. But every time there's a dip people say it's going down to $0 so maybe they live in alternative realities? Either way, I don't hold any crypto I'm just a spectator.

 

[Jroc187]

What crash? It's getting back up as always. I'd like it to stay down for enough time for people to start selling mining GPUs and then it can do whatever.

Does anyone commenting on here actually understand how economics work?

Bitcoin isn't dead... it has "crashed" but will rebound (it has already begun doing that)...

El Salvador is a 3rd world country who had no stable currency before adopting Bitcoin. While the decline certainly isn't great, nations (even crappy ones like El Salvador) must think long term... Bitcoin will rise again and El Salvador will be the better for it.

What better way to crash a Country? Manipulation in crypto is easy because there are no regulations which makes it highly volatile. Crypto right now is like the Wild West where anything goes even to a point where the crypto exchanges can manipulate the prices to attract desirable investors.

The question is how many times will crypto crash before you start loosing because your average value is less than what you started? Rinse and repeat. Of course the Stock Market does this too but you can sell and buy a better performing stock to prop up your portfolio. Crashing crypto many times will be an easy way to make people poor.

I like asking the die-hards, what do you care what the price is, if your never going to sell or part with it no matter what and take it to the grave

 

[Squid Surprise]

I like asking the die-hards, what do you care what the price is, if your never going to sell or part with it no matter what and take it to the grave

But you USE it.... so you should care what price it is...