The country of El Salvador saw its reserves fall by approximately $20 million as the crypto market crashes and the price of Bitcoin continues to fall.
El Salvador was the first country to make Bitcoin a legal tender in September of last year. Since then President Nayib Bukele has spent a total of $103 million on 2,301 bitcoins.
The latest purchase was made on May 10, when the President announced the addition of 500 Bitcoins priced at an average of $30,744 each to its holdings.
At the time when the President announced this, the country’s bitcoin reserves totalled about $71.4 million, while currently it is somewhere around $52 million.
According to President Bukele, the bullish bitcoin investments could rescue El Salvador’s economy from its growing debt-to-GDP ratio.
The International Monetary Fund (IMF) has expressed concern about the sustainability of El Salvador’s bitcoin experiment and is unlikely to approve loan payments.
The IMF El Salvador team, led by Alina Carare warned in February, “households and businesses who hold Bitcoin balances and save in Bitcoin could lose wealth through large swings in value.”
“The adoption of Bitcoin as legal tender is fully funded by public money, through a trust fund. If the price of Bitcoin was to plummet, the resources in the trust could be rapidly depleted.”
The ongoing market crash has resulted in a widespread selling frenzy, worsening the situation. The price of Bitcoin is currently trading at around $22,800, a massive drop from it’s all-time high of more than $69,000 in November 2021.
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