The cryptocurrency market has entered a bear phase, with major virtual currencies experiencing continuous declines. Bitcoin recently plummeted below $20,000 last weekend, significantly impacting early investors - particularly El Salvador, the first country to adopt Bitcoin as legal tender.
El Salvador's Bitcoin Holdings Lose Half Their Value
President Nayib Bukele's administration has purchased 2,301 Bitcoin at an average price of $45,908 per coin**, totaling approximately **$101 million in investment. At current market prices, this represents a paper loss of about **$58 million** (NT$1.7 billion).
👉 Why are institutional investors still bullish on Bitcoin despite the crash?
Government Leadership Urges Patience
President Bukele remains optimistic despite market turbulence, recently tweeting:
"I've noticed some people feel anxious about Bitcoin's market price. My advice? Stop checking charts and enjoy life. If you've invested in Bitcoin, your investment remains secure. Its value will surge significantly after this bear market passes. Patience is key."
Key points from Bukele's stance:
- Short-term volatility shouldn't overshadow long-term potential
- Historical patterns suggest post-bear market recoveries
- National strategy focuses on multi-year adoption timeline
Financial Officials Downplay Concerns
Finance Minister Alejandro Zelaya addressed concerns during a June 15 interview:
- No Bitcoin sold: Confirmed the government maintains its full holdings
- Minimal budget impact: Losses represent <0.5% of national expenditures
- Strategic perspective: Emphasized the multi-year nature of monetary policy shifts
👉 How do countries hedge against cryptocurrency volatility?
Bitcoin Adoption in El Salvador: Key Facts
| Metric | Detail |
|---|---|
| Adoption Date | September 2021 |
| Total BTC Holdings | 2,301 coins |
| Average Purchase Price | $45,908 |
| Current Value Estimate | ~$20,000 per coin |
| Percentage Drop | ~56% from peak |
Frequently Asked Questions
Q: Why did El Salvador adopt Bitcoin as legal tender?
A: To reduce remittance costs, increase financial inclusion, and attract technological investment.
Q: How has the public responded to Bitcoin adoption?
A: Acceptance has been mixed, with some merchants embracing it while others prefer traditional currency.
Q: What's the government's long-term Bitcoin strategy?
A: To hold assets through market cycles while building necessary digital infrastructure.
Q: Are other countries following El Salvador's example?
A: Several developing nations have shown interest, but none have fully replicated the model yet.
Q: How does Bitcoin help with remittances?
A: It potentially reduces transfer fees and processing times for cross-border payments.
Q: What safeguards exist against price volatility?
A: The government maintains dollar reserves and limits Bitcoin's percentage of national assets.
Market Outlook and Future Projections
While current conditions appear bleak, cryptocurrency analysts note:
- Bear markets typically last 12-18 months
- Previous cycles show exponential post-crash rebounds
- Institutional adoption continues growing behind the scenes
The Salvadoran government's position reflects a calculated gamble on Bitcoin's long-term appreciation potential, betting that future gains will outweigh current paper losses.
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