El Salvador, Where Bitcoin Is Legal Tender, Also Shaken by Cryptocurrency Crash Triggered by FTX Collapse

"Thank you for selling cheaply," El Salvador President repeatedly 'buys the dip' during Bitcoin crash
El Salvador's losses about 96 billion won... Economic crisis deepens and default risk rises

President Bukele of El Salvador. Photo by Reuters Yonhap News

[Asia Economy Reporter Yoon Seul-gi] El Salvador, a Central American country that became the first in the world to recognize the cryptocurrency Bitcoin as legal tender, is being pushed into an economic crisis due to the sharp decline in cryptocurrency prices.

On the 14th (local time), according to the Spanish edition of El Pa?s and Infobae, cryptocurrency prices worldwide have plummeted following the bankruptcy filing of FTX, one of the world's top three cryptocurrency exchanges.

Following FTX's bankruptcy protection filing, the value of the coin Chronos issued by the global exchange Crypto.com has also dropped significantly, spreading the cryptocurrency crisis. As vulnerabilities in the cryptocurrency industry have been exposed, Wall Street institutional investors are reportedly giving up expectations for cryptocurrencies and excluding them from their investment targets. Bitcoin prices have also fallen to their lowest levels in the past two years. Currently, 1 Bitcoin is trading at around $15,000 to $16,000.

The cryptocurrency market crisis is showing signs of delivering a fatal blow to El Salvador's economy. El Salvador was the first country in the world to adopt Bitcoin as legal tender in September last year, and President Nayib Bukele (40) has continued to "buy the dip" amid the Bitcoin crash.

President Bukele, when the cryptocurrency market was not doing well, on July 1st, purchased an additional $1.52 million worth of Bitcoin (approximately 2.0146 billion KRW) and posted on his Twitter, "Bitcoin is the future. Thank you for selling it cheaply," he said. El Salvador has spent about $107.15 million (approximately 142 billion KRW) on Bitcoin purchases over 11 transactions.

However, El Salvador's Bitcoin investment return is currently in the negative. According to Nayib Tracker, a private website that shows El Salvador's Bitcoin investment profits and losses in real time, as of this day, the country has lost about 64% of its investment, with losses amounting to $68.37 million (approximately 90.6 billion KRW).

As Bitcoin's decline continues, El Salvador's risk of default is also increasing. It is forecasted that the debt-to-GDP ratio will exceed 85% this year. The international credit rating agency Standard & Poor's (S&P) has rated El Salvador's sovereign credit rating as "CCC+," indicating "substantial risk." This is the lowest level in Central America.

This content was produced with the assistance of AI translation services.