People had concerns when El Salvador decided to make Bitcoin legal tender. Those concerns were exacerbated when the government announced it would buy Bitcoin regularly. In the end, the country proved all the naysayers- including the WEF and IMF – wrong by not defaulting on its debt and without selling BTC.
El Salvador Has Done It
It isn’t hard to find articles claiming how El Salvador was set to default on its debt in January 2023. Things had looked bleak for the country for several years. As such, pessimism was more than warranted. Moreover, the “controversial” decision to make Bitcoin legal tender and add it to the government’s financial reserves got a lukewarm reception. Crypto enthusiasts rejoiced, President Bukele was optimistic, yet virtually everyone else expected disaster to strike.
Things looked pretty bleak throughout 2022 as the Bitcoin price plummeted below $20,000. This is a stark contrast to its 2021 all-time high of $69,000, a value that may not be reached for a while. Even so, the government of El Salvador refused to strike a deal with the IMF for relief. President Bukele remained confident the country would pay its $800 million bond by January 2023 despite BTC’s hardship.
The media had a field day discrediting El Salvador’s rating and pro-Bitcoin stance. That was to be expected, as it remained a dicey decision, although one that could work out well with the right approach. Even the New York Times claimed El Salvador’s “big bet on Bitcoin isn’t paying off” in July 2022. A remarkable headline, as the paper doesn’t care much for El Salvador or its economic situation. That is, unless it can be leveraged to discredit Bitcoin and cryptocurrencies further.
Since when the @nytimes has devoted so much time and space to El Salvador’s economic initiatives?
It’s clear they’re afraid, #Bitcoin is inevitable.
By the way, they say we’re heading to default. Will they publish an apology once we pay everything on time? 😉 pic.twitter.com/XBNsUScRLW
— Nayib Bukele (@nayibbukele) July 8, 2022
Earlier this week, El Salvador did what many people considered impossible. The country successfully repaid its $800 million bond, plus interest, without a late payment, delay, or financial aid. Nor did the country sell its Bitcoin reserves, as it did not need it.
Well, we just paid in full, 800 million dollars plus interest.
But of course, almost nobody is covering the story.
I just found one, yes ONE, in spanish, from Colombia https://t.co/PcRES3poE1
They lie and lie and lie, and when their lies are exposed, they go on silence mode.
— Nayib Bukele (@nayibbukele) January 24, 2023
While it is tricky to state Bitcoin has given the country a financial boost, their pro-BTC stance hasn’t diminished El Salvador’s ability to uphold financial commitments. That is a major victory and creates an exciting precedent for other countries.
What Comes Next For The Country?
Following the bond repayment, one has to look at El Salvador’s future plans. It is plausible to assume the government will continue to add more BTC to its balance sheet. That is despite losing roughly 65% of those holdings’ value throughout 2022. Interestingly, none of the mainstream media – who happily discredited the country in the past – want to openly discuss the government’s approach works (so far). Adding more BTC to the balance sheet is a powerful move, although not a guarantee for future success.
However, the country has another big bond payment in January 2025. That payment is a $367 million one, not accounting for interest payments. In positive news, the country secured a $350 million loan through the Central American Bank for Economic Integration. It is unclear if the loan will be used for future bond payments or perhaps to buy more BTC.
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