In June 2021, El Salvador became the first country to make cryptocurrency Bitcoin (CRYPTO: BTC) legal tender. The move was supported by the country’s President Nayib Bukele, a vocal Bitcoin bull.
Here’s the latest on Bukele and the performance of Bitcoin since the landmark event.
What Happened: Bukele is seeking to run for reelection as the president of El Salvador, according to a report from Reuters. The president’s current term ends in 2024.
El Salvador was once one of the countries that banned leaders from serving consecutive terms. The country’s supreme court overturned this ruling in September 2021.
“Developed countries have reelection, and thanks to the new configuration of the democratic institution of our country, now El Salvador will too,” Bukele said in a speech Thursday.
El Salvador bought Bitcoin as part of the backing of legal tender and doubled down with multiple purchases in 2022 including in January and June.
The International Monetary Fund has spoken out and criticized the move to make Bitcoin legal tender.
Ratings agency Fitch downgraded the debt rating from CCC to CC for the country due to its increased holdings in Bitcoin and its “tight fiscal and external liquidity positions."
“Contrary to what the media has been saying all this time, El Salvador has the liquidity not only to pay all of its commitments when they are due but also purchase all of its own debt, 'til 2025, in advance,” Bukele has said about potential debt issues for the country.
El Salvador has to finance $3.7 billion between September 2022 and January 2023.
Fitch said there is a “probability of a payment default.” Bukele maintained there is “zero risk” of default for the country.
Despite the crypto bear market and the price of Bitcoin falling, residents of El Salvador have shown strong support for Bukele.
In July, Bukele had an approval rating of 86% in a Gallup poll. The president of El Salvador maintained approval ratings of more than 75% since taking office in 2019. The strong approval ratings make Bukele one of the most popular world leaders.
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Bitcoin Return Since Legal Adoption: El Salvador became the first country in the world to make Bitcoin legal tender on June 9, 2021. The new ruling made it so residents of the country could use the leading cryptocurrency for transactions and also pay taxes.
El Salvador legalizing Bitcoin was seen as a major event for the cryptocurrency sector and was worldwide news. Investors who went long the cryptocurrency at that time have not fared as well as Bukele’s approval ratings.
A $1,000 investment in Bitcoin on June 9, 2021, could have purchased 0.0268 BTC. The $1,000 investment would be worth $529.27 today, based on a price of $19,748.96 for Bitcoin at the time of writing.
The $1,000 investment from the day El Salvador legalized Bitcoin would be down 47.1%.
