The bitcoin crash has negatively affected the first country to adopt bitcoin, El Salvador, as a legal tender. The President of El Salvador, Nayib Bukele, has been an advocate of bitcoin adoption as a legal tender and stated that his country adopted bitcoin as a legal tender in order to help the people of El Salvadoran but with the current drop in prices of cryptocurrencies, what is the hope for the people of El Salvadoran since we are currently experiencing bitcoin winter?
The general cryptocurrency market is down and at press time, the number one cryptocurrency that was adopted as a legal tender by El Salvador, Bitcoin, is trading for $22,622.71 on a trading pair of BTC/USDT on the Gate.iocryptocurrency exchange. Check out Gate.io crypto exchange now. Bitcoin is down by 6.82% in the last 24 hours and this is the lowest since 2021 from the trading chart of gate.io. Moreover, this is the first time the global market cap of cryptocurrency is below $1 trillion since 2021. Would the President of El Salvador listen to the International monetary fund and never have made bitcoin a legal tender?
El Salvador Bitcoin is down by 50% (H2)
As of the time of writing the bitcoin holding in El Salvador is down by 50% according to the minister of finance. The country had more than 2300 bitcoins in total, with the current market liquidation, the amount of bitcoin loss is more than $50 million in total. The International Monetary Fund (IMF) has discouraged the idea of bitcoin adoption by the country and lately even urged the leadership to reverse its decision of bitcoin adoption as a legal tender. Lately, IMF offered to assist El Salvador with it and there have been meetings between the IMF representatives and El Salvador representatives for the formation of the country’s bitcoin law.
However, the country has been facing major economic challenges and this current bear market will contribute to the struggling economy because the leadership decided to go all-in to implement bitcoin as a legal tender and then invested the public funds into bitcoin. Since last September the government kept buying bitcoin, what will the government be thinking right now in the midst of the current massive sell-off by investors and cryptocurrency traders?
Furthermore, before the bitcoin crash, the President had revealed the country’s plan to build the bitcoin city. As bitcoin crashed, most altcoins have followed suit and one wonders what countries that are planning to adopt bitcoin as a legal tender will be considering right now. Companies like the Software company in the United States and Microstrategy have suffered massive losses, also because of their large bitcoin holdings. With the current crypto market state, what are the fate of the bitcoin whales, crypto traders, and investors?
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Source: https://www.thecoinrepublic.com/2022/11/28/the-effect-of-the-bitcoin-crash-on-el-salvadors-economy/