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Monday, November 21, 2022

El Salvador's Bitcoin adoption

El Salvador's Bitcoin adoption

Bitcoin / U.S. dollar BITSTAMP:BTCUSD

Today, we prepared for our audience a concise article about the adoption of Bitcoin in El Salvador.

Some facts about El Salvador
El Salvador is a South American country of 6.5 million people and a GDP of $28.73 billion. Interestingly, El Salvador is one of three Latin American countries using the U.S. dollar as their national currency. The country's population has a relatively high literacy rate of about 90%. Despite that, in 2017, Consejo Nacional de Inclusión y Educacíon Financiera (CNIEF) found that only one-third of adults in El Salvador owned a bank account at a financial institution.

Population = 6.5 million
The poverty rate ($5.5/per day) = 22.2% of the population (2019)
GDP = $27.73 billion (2021)
GDP per capita = $4 408.52 (2021)
Debt-to-GDP = 82% (2021)
Government budget value = -$1.417 billion (2021)
Government spending = $5.647 billion (2021)
Government revenues = $6.038 billion (2021)

Illustration 1. 01 -

snapshot
Illustration 1. 01 shows the daily chart of BTCUSD . The yellow arrow points to the date of El Salvador's adoption of Bitcoin .

Bitcoin adoption - Success or failure?
In September 2021, El Salvador adopted Bitcoin as a legal tender, being the first country in the world to do so. That was quickly met with a wave of bullish calls for a new era of institutional adoption. However, in hindsight, this decision looks like an absolute failure, with the government wasting taxpayers' money to fulfill one man's dreams.

The president of El Salvador, Nayib Bukele, announced his first purchase of 200 Bitcoins on 6th September 2021, when the price of one coin traded at around 52 000$. The next day, he tweeted that his government bought another 200 Bitcoins at roughly the same price, taking the overall holdings of the country to 400 coins. Over the coming months, El Salvador continued to double down on a losing position, with more purchases in late November 2021, October 2021, December 2021, January 2022, May 2022, and June 2022.

September 2021 - 700 Bitcoins near 52 000$
October 2021 - 420 Bitcoins near 58 000$
November 2021 - 100 Bitcoins near 54 000$
December 2021 - 171 Bitcoins near 48 000$
January 2022 - 410 Bitcoins near 36 500$
May 2022 - 500 Bitcoins near 30 000$
June 2022 - 80 Bitcoins near 19 000$

El Salvador has amassed 2 381 coins since September 2021. Based on Nayib Bukele's tweets, the country paid $105 million for its stash, now worth only $39.5 million, which amounts to more than a 60% loss. Nevertheless, this did not stop the president, who announced daily purchases of Bitcoins last week, starting on 18th November 2022.

Illustration 1.02 - Nayib Bukele 2022
snapshot
Illustration 1.02 shows the daily chart of BTCUSD for 2022. White arrows highlight tweets of the president of El Salvador on the topic of Bitcoin .

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

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