El Salvador lost half of its investments in bitcoin due to a sharp drop in the cryptocurrency exchange rate. Now the cost of bitcoin has dropped below 22 thousand dollars, reports Reuters.

El Salvador became the first country in the world to recognize bitcoin as an official currency. Since 2021, the Latin American state, by the decision of President Naguib Boucle, has acquired a total of 2301 bitcoins, spending $ 105 million on them. At the moment, El Salvador’s crypto assets are worth only about $ 51 million.

The fall in the value of the cryptocurrency did not allow the authorities of El Salvador to issue special crypto bonds, the purpose of which was to reduce the country’s public debt, amounting to more than 7.5 billion dollars.

Then Bukele then made a bet on Bitcoin in order to maintain independence from the external management of the IMF. The President achieved the legalization of BTC in the fall of 2021 and spent $ 100 million of foreign exchange state reserves to purchase cryptocurrencies to the national fund.

Now he has “lost weight” by a third due to the decline in the BTC exchange rate. This completely destroyed the plans of the President of El Salvador, counting on the growth of cryptocurrencies in order not only to increase reserves, but also to be able to issue BTC-government bonds, an alternative form of borrowing.

Now the ideas of the crypto-tranche of bonds have been canceled. In January, El Salvador will have to pay $ 800 million in loans, which is unlikely to happen without the help of the IMF. It will not be due to the legalization of Bitcoin, which brought only problems and did not achieve the goals.

Rating agencies had anticipated the IMF’s reaction in advance and had already assigned El Salvador a “junk” investment rating, which stopped the flow of investments and the possibility of loans. The population and business did not accept BTC. About 80% of companies ignore the mandatory acceptance of cryptocurrencies, more than 60% of the population have not downloaded the official Chivo crypto wallet.

These problems do not stop Bukele from further investing income in building up Bitcoin reserves. If the exchange rate continues to fall, El Salvador will become the first country in the world to default due to the depreciation of the cryptocurrency.