El Salvador President Nayib Bukele took to Twitter on Sunday to reassure Bitcoin investors, claiming such investments are safe and will grow “immensely” after the bear market.
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Fast facts
- “My advice: stop looking at the graph and enjoy life. If you invested in #BTC your investment is safe and its value will immensely grow after the bear market,” Bukele said on this verified Twitter handle.
- Despite widespread protests, El Salvador reportedly bought 200 Bitcoin before adopting the cryptocurrency as legal tender in September last year. It was last known to own 2,301 Bitcoin.
- The value of the Central American country’s Bitcoin holdings have reportedly fallen by nearly half amid the current bear market.
- Last week, El Salvador’s finance minister Alejandro Zelaya claimed the country’s Bitcoin exposure will have minimal impact on its fiscal health.
- “… when they say that El Salvador’s fiscal risk due to Bitcoin is very high, all it does is make me laugh, and I think any serious economist should do the same because it is an extremely superficial analysis and they speak from ignorance,” Zelaya said.
- El Salvador’s total reserves in 2020 amounted to US$3.08 billion, according to estimates by the World Bank.
- That would put the value of the country’s unrealized losses related to their Bitcoin investments at US$40 million, or 1.3% of the estimated total reserves in 2020, Forkast’s calculations showed.
- In late January, the International Monetary Fund (IMF) said El Salvador should dissolve the US$150 million trust fund it created when it made Bitcoin legal tender, returning any unused funds to its treasury.
- The trust fund was created to allow the automatic conversion of Bitcoin to U.S. dollars to address concerns over the high price volatility in the crypto.
- The IMF also recommended eliminating the US$30 incentive for use of the digital wallet “Chivo.” There could be benefits to the use of Chivo, but only using dollars, not Bitcoin, the Washington-based organization said.
- “In the near-term the actual costs of implementing Chivo and operationalizing the Bitcoin law exceed potential benefits,” the IMF report said.