Bitcoin popularity continues to wane in El Salvador
Two-thirds of Salvadoran citizens consider President Nayib Bukele’s bitcoin policy a failure, and more than three-quarters have never used it, German public news agency Deutsche Welle reported this week.
Less than 17% consider it a success, according to the University Institute of Public Opinion at Jesuit Central American University. That makes it “the most unpopular measure for the Nayib Bukele government,” university chancellor Andreu Oliva said.
And yet, Bukele remains the most popular leader in Latin America, with an approval rating of 86%, CID Gallup so.
How long that will remain the case is another matter, as the country continues to cruise toward a debt default in early 2023.
The International Monetary Fund (IMF) again rejected the Bukele administration’s attempt to restart negotiations on a $1.3 billion loan that would allow it to pay off a bond due in early 2023, according to Infobae.
“In meetings throughout the year … the IMF has privately warned Bukele officials of the difficulty of bringing negotiations to a successful conclusion without the Salvadoran government reforming Bitcoin law to remove the cryptocurrency from its legal tender status,” it said.
Last month, the IMF reiterated to the Salvadorans that without this reform, negotiations would not move forward, Infobae added.
Last month, ratings agency Fitch again downgraded El Salvador’s sovereign debt, saying that buying back $565 million in debt for just $275 million does not change the likelihood of default.
El Salvador’s bonds are currently down more than 57% since January 1, 2019 – despite rising steadily since July, when they bottomed out at 27.7% of their price since then.
That said, bond issuance plans have not been abandoned according to Bitfinex CTO Paolo Ardoino, whose exchange plans to tokenize and issue the bonds. The company was waiting for the issuance of the necessary licenses, he said earlier this year.
An expensive dream
As for the country’s investment in 2,381 bitcoins, it has lost more than $60 million of the $107 million it spent to buy them.
As for money transfers, cited as a primary use for bitcoin as it would allow instant and very affordable transfers sent via the government’s Chivo digital wallet, the country sees very little use. Just less than 2% of the $5.7 billion received through September came via Chivo.
Another pain point is Bukele’s Bitcoin City project, which would use the proceeds of a long-delayed bitcoin-backed bond issue to begin building a geothermally powered bitcoin mining facility. An entire bitcoin-centric city was to follow.
But the government has not given up on that dream,” a Salvadoran official at its Dutch embassy told Cointelegraph on October 14.
“El Salvador’s dream is to have a Bitcoin City and from there make our society bigger, stronger,” said Deputy Ambassador Celarié Landaverde. “We are trying to attract more and more investment to this area so that we can develop these communities.”
She added that the country accepts investments on a first-come, first-served basis, with early participants getting better returns, Cointelegraph noted.
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