The date 7th September, 2022 marks the one year anniversary of EL Salvador becoming the first country which adopted Bitcoin (BTC) and turned it into a legal tender accepted around the country. Inorder to turn Bitcoin into a legal tender EL Salvador enforced the Bitcoin law across the country. Although currently the price of Bitcoin dropped around 60% resulting in a massive fall of value of the country’s Bitcoin portfolio however this does not imply that the Bitcoin experiment of the country is turning into a failure.
While legalising Bitcoin as a legal tender the President of EL Salvador Nayib Bukele had remarked that after legalising Bitcoin as a legal tender nearly 70% of the population of the country which had zero access to the banking system of the country will be able to be a part of a tangible financial setup.Apart from that the adoption of Bitcoin was supposed to strengthen the economy of the country, open the country for foreign investments as well as reduce the country dependence on the US Dollar.
However if we have a look at the current scenario we are bound to question whether the Bitcoin investment was actually profitable because as of now Bitcoin is trading at a loss of 60% of its value.
The financial data reveals that EL Salvador made its first Bitcoin purchase last year when the coin was trading at a value of around $ 51,000. The EL Salvador government purchased around 200 BTC which totalled the price of the purchase at around $ 10.36 Million. However the current price of Bitcoin has fallen around $ 18,000. The entire portfolio of the Salvador government has taken a massive drop due to the recent market happenings.
Commenting on the recent price drop the minister of finance for EL Salvador remarked that the country did not suffer any losses due to the price drop because they were in possession of the Bitcoin. Apart from that the Salvador government has been delaying its upcoming Bitcoin Bond Project. The reasons cited for the delay are unfavourable market conditions paired with unsuitable geopolitical happenings.
There has been a mixed bag review by analysts and investors regarding the Bitcoin experiment of EL Salvador. While some strategists declared the entire strategy as a failure, many others noticed that the strategy turned out to be very effective with various tangible benefits. People are hopeful that EL Salvador wound turn out to be a fabulous model favouring Bitcoin adoption across various countries