Bitcoin Analysts: Not All Salvadorans Share Enthusiasm

Bitcoin: Analysts: Not All Salvadorans Share Enthusiasm. Last Saturday, at the conclusion of “Bitcoin Week,” El Salvador’s President Nayib Bukele. Ascended the stage to the applause of fans who were thrilled that their Central American country. Had become the first to recognize cryptocurrency as legal tender. Alongside the United States dollar.

“Bitcoin City” will be built at the base of the Conchagua volcano. With views of the Pacific, according to Bukele. Who is 40 and wears his distinctive backwards baseball cap. Bukele refers to himself as a “savior” in his announcement of the project.

The city, which would be financed by bitcoin-backed bonds and powered by geothermal energy. Would serve as a tax-free haven. “Invest here and you’ll make all the money you desire.” He exclaimed to the ecstatic audience.

Supporters have praised Bukele’s plans, which include making bitcoin legal cash in September. Saying they will bring jobs, financial inclusion, and international investment. To one of the poorest countries in the Western Hemisphere. Bukele has said he will make bitcoin legal tender in September.

“Feel the Bit,” read the message on a huge screen before Bukele. Who describes himself on Twitter as “CEO of El Salvador,” took the stage.

However, several people in El Salvador and beyond were outraged by the glamorous event. Which took place in a country beset by inequality, crime, and inadequate public services.

According to Marce, a Twitter user known as @lamismadeayer. “This video makes me sick, angry, and sad all at the same time.”

The government claims that the issuing of $1 billion in “Volcano bonds” in cooperation with Blockstream. A business that provides digital assets infrastructure. Will offer development money for the industry.

The bitcoin bond won’t fill that void

Half of the bond proceeds would used to fund infrastructure. Such as the construction of Bitcoin City, with the remaining half . Being used to purchase bitcoin and held in escrow for five years. According to the idea, only once the initial $500 million has recouped. Will bitcoin able to sold, producing a capital return that will split 50-50. Between the government and investors. However, this will only happen after the initial $500 million has recouped.

In comparison, another Salvadoran bond that matures in 2032 has a current yield of close to 13.9 percent. And pays a 6.5 percent coupon, which paid on an annual basis.

The financial markets and bitcoin analysts have reacted cautiously to this news. Since late April, the difference between the yields on Salvadoran government bonds. And the yields on safe-haven U.S. Treasury bonds has increased significantly. This week, it gained a further 79 basis points, putting it at 1,200 basis points. The broadest it has ever been.

Additionally, according to opponents, investors pulled their money out of El Salvador’s bonds in May. After the Bukele-controlled Congress sacked the country’s attorney general. And five Supreme Court judges and replaced them with Bukele allies.

According to statistics from Refinitiv, the yield of bitcoin analysts on the 2025 bond is more than 18 percent. Because of the high cost of borrowing on the market. The country virtually shut out of the market.

Using bitcoin to fund the government, according to Graham Stock, senior sovereign analyst. At Blue Bat Asset Management, might dissuade El Salvador from adopting sustainable spending policies. Adding that the country would most likely continue to require IMF assistance.

According to him, “building an economy on cryptocurrency mining and luring cryptocurrency enterprises. It is an untested strategy, to put it lightly.”

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