El Salvador Records $40M Paper Loss in Bitcoin
On Monday, the leading cryptocurrency tumbled to an 18-month low with over $200 billion wiped off the entire crypto market. At the time of writing, the total crypto market cap has dropped below $1 trillion from an all-time high of $3 trillion in November 2021. BTC is also currently trading at $22,000, a 67% decrease from its ATH price of $68,800.
During the 2021 bull run, El Salvador became the first nation in the world to adopt Bitcoin as a legal tender alongside the U.S. dollar. Since then, the volcanic country has been bullishly adding bitcoin to its balance sheet, amassing a total of 2,301 BTC, valued at around $70 million at the time of its last purchase.
Bitcoin Crash Poses No Risks
With the current market conditions, El Salvador’s Bitcoin portfolio is now worth about $54 million with a paper loss of $40 million, according to Deutsche Welles.
The nearly 50% unrealized loss has called for concern among citizens and speculators, but Zelaya noted that the $40 million paper loss is not even up to 0.5% of the country’s national general budget. This means that the crash does not pose a high risk for El Salvador.
“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. The fiscal risk is extremely minimal,” he said.
One Year On
Meanwhile, it’s been a year since El Salvador publicly revealed plans to legalize bitcoin as a legal tender. Over the last year, the country has gone beyond legalizing BTC as a medium of exchange despite criticism from global regulators and lawmakers.
For instance, the country is planning to construct the world’s first Bitcoin city that will be funded by a $1 billion bitcoin bond. Zelaya noted that the bond which was supposed to be issued between March 15 and 20 is being delayed due to the Russia-Ukraine war.