Embattled El Salvador President Calls for Patience as Crypto Market Tanks

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President Nayib Bukele of El Salvador was met with mixed reactions when he announced that his country would make Bitcoin a legal tender. However, while many believe that the President made the right call, the reality of the market hasn’t quite proven him right.

In the face of mounting criticism for what many would call a reckless gamble, Bukele is now appealing to investors to hold the line.

Shut The Graphs & Enjoy Life

Over the weekend, President Bukele took to his Twitter page to share some words of affirmation to crypto inventors affected by the past week’s market downturn. Sharing the message of hope, Bukele echoed the age-old counsel of buying the dip and waiting out the storm.

Bukele explained in his tweet that markets move in bullish and bearish cycles. He explained that the current occurrences are just a classic case of a bearish cycle. The President counselled investors to “stop looking at the graph and enjoy life”, adding that any money put into Bitcoin would eventually grow and deliver yields to investors.

Despite his zen approach to things, there is no doubt that Bukele must be feeling some of the heat. The President of El Salvador came under heavy criticism when his country adopted the Bitcoin standard and made the leading cryptocurrency a legal tender.

El Salvador’s first Bitcoin buy occurred in September 2021, when the leading asset traded at about $50,000. The country had continued to buy Bitcoin, riding the asset’s then-bullish wave to an all-time high of $69,000. Crypto enthusiasts saw Bukele as a genius who timed the market and made millions for himself and his country. With most crypto enthusiasts giving a positive Bitcoin price prediction, Bukele could easily defend his decision.

Sadly, that reputation is unravelling as Bitcoin’s price has tumbled. The digital asset hit a low of $18,000 over the weekend and currently trades at $20,500. Even with the gains in the past 24 hours, the Bitcoin portfolio of El Salvador is still down by 50%. Nayib Tracker shows that El Salvador’s Bitcoin stash is worth $47.5 million currently – down by 57.9%.

Alejandro Zelaya, El Salvador’s Minister of Finance, recently shared his boss’s bullish view on crypto. At a press conference last week, Zelaya explained that the government has still not ‘made a loss’ from its Bitcoin investment since it hasn’t sold any coins.

Zelaya put the news media on blast. He explained that their fixation with the numbers would only do more harm than good. As he explained, Bitcoin is beneficial for its inflation-resistant capabilities. So, despite the numbers, the government remains committed to the crypto asset.

Margin Call Coming?

Bukele isn’t the only well-known figure investors criticise for extreme opinions on Bitcoin. Michael Saylor, whose firm MicroStrategy purchased billions of dollars in Bitcoin, has refused to give up on the digital asset, even facing a margin call to keep his stake.

MicroStrategy is currently the world’s largest institutional Bitcoin holder, with $2.68 billion in assets. Part of that haul was bought using a $205 million loan from crypto-friendly Silvergate Bank. To secure the loan, MicroStrategy posted some of the BTC in its treasury as collateral.

MicroStrategy’s financial head Pong Le said in an earnings call in May that the company would face a margin call if Bitcoin’s price fell below $21,000. And for most of the past week, the digital asset has trailed that level. Saylor has said that his company doesn’t plan to sell any Bitcoin yet, but the pressure is mounting. If the crypto asset’s price continues to dip, MicroStrategy will have to pay.

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About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.