©Reuters. Storm after FTX bankruptcy… Default crisis in El Salvador
El Salvador, which adopted Bitcoin as the world’s first fiat currency and bought Bitcoin with government finances, was in danger of default due to the bankruptcy of cryptocurrency exchange FTX. El Salvador’s President Naib Buquele said he will continue to buy them, saying, “I will buy one bitcoin every day.”
According to “Nive Tracker”, which shows the state of El Salvador’s investments, as of 18, the El Salvador government’s bitcoin loss amounted to $67.16 million (about 90 billion won). El Salvador’s government has purchased 2,381 bitcoins for a total of $107.16 million since September of last year. The average purchase price per piece is $45,000, but as of that day, the price of bitcoin was only $16,000 per piece. That’s a 63% loss.
According to foreign media, El Salvador has to pay off its $667 million national debt by January next year, but is in a situation where it lacks fiscal capacity. Some predict that the debt-to-GDP ratio will exceed 85% this year. The international credit rating agencies Fitch and Standard & Poor’s (S&P) rate El Salvador’s national credit rating as CCC and CCC+, respectively. It is the lowest tier in Central America. The International Monetary Fund (IMF) has repeatedly advised El Salvador to withdraw from adopting bitcoin as a fiat currency for reasons such as financial stability, but President Buquele has refused, saying it was a “sovereign intervention”.
President Buquele said on his Twitter on the 16th: “I will buy 1 bitcoin every day from tomorrow” even as the price of the cryptocurrency continued to weaken due to the FTX crash. Even after the Earth USD/Moon crisis in May and the bankruptcy of cryptocurrency hedge fund Three Arrows Capital (3AC) in July, he bought bitcoin en masse, saying it was “an opportunity to buy at a low point.” The British Guardian pointed out that “President Vukele is degenerating into a ‘bitcoin player'”.
Reporter Binnansae [email protected]
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