The sharp depreciation of the bitcoin price directly affects El Salvador’s economy. The government declared the crypto asset as an official currency in 2021, and in recent months it has lost nearly US$56 million.
El Salvador has accumulated more than 2,300 bitcoin units on the crypto market. However, the drop in the price of the crypto asset has significantly reduced the country’s total balance value.
Although it remains with all the bitcoins that have been accumulated, the balance has been reduced due to the asset’s large devaluation since the last all-time high in November 2021.
However, even with the sharp devaluation of bitcoin, El Salvador has continued accumulating the crypto asset. In the last month, for example, the Latin American country acquired 500 digital currency units.
Thus, considering the average price paid for bitcoins, El Salvador has accumulated a devaluation of almost 50 percent. In total, the crypto asset price has already fallen by more than 66% in the past seven months.
Bitcoin price affects El Salvador
The price of bitcoin is facing a significant historic devaluation. The crypto asset has not experienced a continuous drop like it has in recent weeks since 2014.
For example, in the past seven days alone, the digital currency has plummeted 30% on the crypto market. Currently, each bitcoin unit is trading at around US$ 20,000.
This devaluation directly affects the economy of El Salvador, which has enacted the crypto asset as legal tender. Since September 7, 2021, the digital currency has been widely used by the population alongside the dollar.
Recently, the president of El Salvador, Nayib Bukele, considered the need to buy more bitcoin. He asked on Twitter whether this might not be the ideal time to purchase more units of the crypto asset.
“Are you telling me we should buy more bitcoin?”