El Salvador finance minister revealed that the country is not ready for a Bitcoin bond, blaming the Ukraine war for current market conditions.
El Salvador is still not ready to launch its $1 billion Bitcoin (BTC) bond, according to the country’s finance minister Alejandro Zelaya.
Zelaya made this revelation at a media session on June 1st, once again citing unfavorable market conditions – this time caused by the Ukraine war. El Salvador initially planned to launch its Bitcoin bond between March 15th and 20th, six months after adopting the leading token as legal tender. The Central American nation sought to raise $1 billion by issuing BTC volcano bonds to restructure its debt. However, on Tuesday, March 22nd, Zelaya announced a postponement of the initiative because of these market conditions. Some of the negative optics mentioned are the US Fed’s inflation-triggered hawkish stance and geopolitical uncertainty. However, Zelaya maintained that the government will go ahead when conditions are ideal. However, the country’s finance minister suggested that this might not happen until the middle of the year. Generally, Zelaya still spoke optimistically about the country’s chance of success as he fielded questions during the news program.
At the time of El Salvador’s first bond postponement, its government was still finalizing key legislation. The statute pertained to the governing framework around the regulation of digital assets in El Salvador.
Second El Salvador Bitcoin Bond Postponement, Other Related News
Following its second Bitcoin bond postponement, analysts have addressed another related concern. They question the country’s strategy of continually purchasing BTC despite recent massive drawdowns in the digital currency. For a while, El Salvador has been stockpiling Bitcoin since making it legal tender by systematically buying dips. However, analysts consider this imprudent. These analysts believe that hedging bets on something as volatile as BTC can prove costly. They estimate that El Salvador has already lost over $35 million worth of investments. The analysts arrived at this figure by comparing Bitcoin’s current price to the price at the time of initial purchase. Notwithstanding, El Salvador added another 500 BTC to its national treasury on May 9th during another dip, and now has a haul of 2,301 tokens.
The inner workings behind El Salvador’s BTC transactions so far remain unclear. Zelaya suggested that the Central American country was holding onto its BTC. However, when asked whether El Salvador has sold any of the leading coins, Zelaya also stated that the nation sold a portion to fund a pet hospital.
On another front, economists currently ponder how El Salvador intends to generate funds to cover its financial obligations. This includes a hefty $800 million bond due for maturity next January. Ricardo Castaneda, an economist at the Central American Institute for Fiscal Studies (ICEFI), does not believe that El Salvador can acquire the funds. According to him, “the country is not guaranteed to get that money”. Furthermore, Castaneda also estimates that El Salvador may require up to $3 billion through 2024, instead of $800 million.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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