Bitcoin and other cryptocurrencies have not ‘raised their heads’ for a few weeks that have presented a historic drop. The main digital currency registers a price below the $30,000.
Investors, businessmen and even governments are concerned regarding the impact that this fall in cryptocurrencies has on the economy.
THE SAVIOR
This country was the first to adopt bitcoin as legal tender. In September 2021 he allocated more than 200 million dollars for its implementation and made it its main economic project.
(Lea: Bitso cryptocurrency platform arrives in the country: this is how it works).
Between September 6, 2021 and May 9, El Salvador has accumulated 2,301 bitcoins for more than 100 million dollars. The investments in 10 purchases announced by President Bukele, and of which no information is provided beyond the president’s tweets, range between 30,700 and 58,000 dollars.
Bitcoin falling by 60% from its all-time highs for the week and the value of its Cryptoactive reserves exacerbate the fiscal crisis “deeper than El Salvador has had in recent decades,” economist Tatiana Marroquín told Efe.
The above is added, according to the economist, to the “accelerated” and “little thoughtful” indebtedness by the Government of President Nayib Bukele and the “arbitrary decisions” in economic and political matters.
El Salvador must pay in January of next year 800 million dollars of Eurobonds, which has raised the alarms of international investors. According to the International Monetary Fund (IMF), El Salvador’s public debt is on a path to “unsustainability” due to current government policies.
The losses due to the fall of bitcoin, which are around 36,000 million dollars, “is not enough to bankrupt the country”, but “other decisions combined with legalizing bitcoin are what have us in one of the crises deepest fiscal that the country has had in recent decades,” said Marroquín, an expert in legislative issues related to public finances, pensions and fiscal transparency.
“The biggest risk in El Salvador is that the government’s ability to plan its finances is not seen and that is shown very forcefully in the handling of bitcoinMarroquin said.
He pointed out that “the fear, today, of investors comes from why that money was lost (due to the fall of bitcoin) and the arbitrariness of the management of public funds.” Between September 6, 2021 and May 9, El Salvador has accumulated 2,301 bitcoins for more than 100 million dollars.
The investments in 10 purchases announced by President Bukele, and of which no information is provided beyond the president’s tweets, range between 30,700 and 58,000 dollars.
SPAIN
In the European country, transactions with crypto assets are legal and increasingly frequent. According to the newspaper El Economista, the fall of bitcoin has implied the reduction of capitalization andn 800,000 million in one month and in 1.3 trillion dollars (GDP of Spain) from maximums.
UNITED STATES
The Terra and Luna cryptocurrencies suffered one of the biggest crashes in the crypto asset market. The concern did not take long to position itself in the United States. The UST collapse caught the attention of US Treasury Secretary Janet Yellen, who called for new regulations in a statement before the US House Financial Services Committee.
“There are long-term ripple effects on other stablecoins, even those backed entirely by cash or cash equivalents like USDT and USDC, and a larger impact on stablecoins like DAI, even though it is over-collateralized with ETH.Mitchell Dong, CEO of crypto hedge fund Pythagoras Investments, told Business Insider in an email interview.
OTHER NATIONS
Experts agree that the effects of this fall will depend on the magnitude of the cryptoactive market in each country. In the case of Central African Republic, the second country to include bitcoin as a currency, and Panama, which is in the process of implementing it in its economy, no significant effects have been reported.
Now, from El Economista they have highlighted that this volatility generates stress in the crypto asset markets, even impacting the financial system. Above all, for those cryptoactive exchange platforms.
(Keep reading: The keys to not being a victim of fraud when investing in crypto assets).
Likewise, it affects the wealth of investors and the loss of faith in the value of crypto assets.
BRIEFCASE
With information from EFE*
