Bitcoin drops to lowest level since 2020: How much is El Salvador losing?

The current value of the cryptocurrency is $26,993. Since 2020, no such decline has been observed.

Bitcoin price keep going down After its price reached $ 26,993 on Sunday. This has led to financial losses not only for crypto enthusiasts but also for the Salvadoran government, which has already purchased 2,301 bitcoins as of May.

The high volatility of cryptocurrency in its value made it play up and down all day Sunday. At 2:55 am it was $27,468 and I tried to recover all morning.

After several hours, it managed to reach $28,112 again, but it took a bearish curve again, reaching its lowest level since 2020.

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An article published in the specialist portal Investing.com asserts that the reason for the recent declines is due to the inflation levels currently recorded in the US markets.

The rate of inflation (rising prices of goods and services) in the US is already at 8.6% year-on-year, which means that food, services and other basic products are becoming increasingly difficult to obtain due to rising prices. Currently reflect.

So cryptocurrencies are no exception to this behaviour. Above all, because it is not the first time that the mentioned digital asset has been affected by the economic situation of international markets, especially the United States.

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Bitcoin crash. Picture taken from tradingview.com

In February of this year, the value of the crypto-asset reached $40,000 due to US President Joe Biden’s recruitment announcements.

The US job market started in 2022 much better than analysts expected. And the Spanish news agency EFE reported that in the first month of this year, 467,000 jobs were created in that country, while the unemployment rate stabilized at 4%.

US President Joe Biden said at the time: “The American jobs machine is more powerful than ever.” At the same time, he bragged about achieving the historic figure of 6.6 million new jobs in his first year in office.

This shows that the dynamics of international markets have the potential to raise as well as bring down the price of Bitcoin.

But why should Salvadorans care whether the cryptocurrency is going up or down?

Nayib Bukele has been buying cryptocurrencies with public money for nine months. As of May 9, he had purchased a total of 2,301 coins on which he had spent approximately $104 million in Citizens Money; Coins for the current price of Bitcoin at $26,993 as of June 12, valued at approximately $62.7 million. That is $41 million less than what the government paid them.

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These purchases don’t seem to have a specific justification, given that Bukele legalized Bitcoin in the country, Bitcoin was only worth $67,000 once, and it was last November. Since then, the government expects crypto assets to reach or exceed $100,000, will that happen?

Investing.com published last week that with the level of inflation as it is now, the trend in the price of Bitcoin is likely to decline. This is due to the concerns of investors who may seek to protect their money in more reliable and stable assets.

The expected, and at the same time feared, amount is about $15,000 and new inflation data could be the “last straw,” according to the publication.

The probability of this value happening increases due to the amount of time Bitcoin has been held without being able to break the $35,000 barrier.

See: Coinbase Could Go Bankrupt Due to Bitcoin Crash

This leads analysts and the niche media to ensure that, given the trend that Bitcoin has maintained, it is likely that far from recovering, it will continue to decline.

Under the justification that bitcoin promotes “financial freedom,” Bukele has made the cryptocurrency, with the support of the association, a form of unsupervised transaction.

The losses or gains of bitcoin purchased as of June 12 by the Central Reserve Bank (BCR) have not been published, nor are other expenses known.

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