El Salvador’s Finance Minister Defended Strategy to Adopt Bitcoin

Updated: 02 August 2022

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El Salvador’s finance minister, Alejandro Zelaya, stated that adopting bitcoin has aided the country’s unbanked citizens. Despite calls from detractors, Alejandro supported the country’s plan to use Bitcoin as legal currency.

In an interview with Bloomberg, Alejandro Zelaya stated that using Bitcoin as a legal currency had enabled a significant portion of the unbanked population to gain access to financial services. It has also increased tourism and attracted foreign investment, he says.

Furthermore, he continues to believe in it despite the fact that digital money is rarely used as a medium of exchange. He stated that the government still intends to create a Bitcoin-backed bond using blockchain technology.

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El Salvador’s Finance Minister Defended BTC Adoption

According to estimates from tweets from El Salvador’s President, Nayib Bukele, the government purchased 2,381 Bitcoin with taxpayer money, now worth roughly half of what the government paid for them. According to a poll conducted by the United States National Bureau of Economic Research, most companies and customers in El Salvador still prefer to make purchases and send remittances in hard cash.

Traditional banking institutions have criticized the use of cryptocurrency in El Salvador, and the International Monetary Fund (IMF) pushed the country to stop accepting bitcoin as legal tender in January.

Bitcoin-Related Initiatives Are Still Evolving

According to Bloomberg, the government is still working on providing bitcoin-backed bonds. Former Honduran President Manuel Zelaya predicted that as market conditions improved, this would occur. He stated that more incentives would be announced soon and that “Bitcoin City” plans were still in the works. “We will not see immediate results,” said Honduran former President Manuel Zelaya. Investors need to be patient. In addition to believing that “new technologies will help people in the future,” Zelaya stated that he supports the traditional, multilateral monetary system.

Government of El Salvador Is Still Buying Bitcoin

The legal tender legislation was passed on September 7, 2021. Whereas, the price of Bitcoin has dropped by 54% since then. Given that the government used taxpayer funds to purchase the tokens, the government’s current unrealized losses total $49.9 million.

However, the El Salvador government purchased 2,381 bitcoin with public funds, now worth nearly half of what the government paid for them. These findings were based on President Nayib Bukele’s tweets.

Bitcoin Technical Outlook

BTC had a great week but showed a slight bearish correction on Tuesday. Bitcoin is trading below the $23,000 mark, with immediate support at $21,750. If BTC falls below this level, it could fall as low as $20,990. The RSI and MACD indicators point to a bullish bias.

On the other hand, the 50 percent Fibo level is a solid resistance level at $24,750. Many expected a cryptocurrency sell-off following two-quarters of negative GDP in the United States, but this has not yet occurred.

Having said that, a break above $24,750 can expose BTC to a 61.8 percent Fibonacci retracement level of $26,650. Best wishes!

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