It’s been a year since bitcoin hit its all-time high of nearly US$69,000 and now 365 days later, things couldn’t be more different.
Bitcoin is now trading at US$16,000 per coin and cryptocurrency is in the throes of a crisis after a massive exchange, FTX, filed for bankruptcy last week.
No-one is feeling the pinch more than El Salvador President Nayib Bukele.
According to an online tracker, at time of writing, Mr Bukele is estimated to have spent US$107 million (A$158m) on 2,381 bitcoin.
However, in the past 12 months as bitcoin has sunk to new lows, that money has more than halved in value, currently worth just US$39 million (A$57m).
That represents a wipe-out of $67 million (A$101 million).
That’s down 62 per cent since his initial purchase.
It comes after Mr Nayib pushed for bitcoin to become legal tender in his country in a world-first move.
According to The Guardian, El Salvador has to foot the bill for a €667 million (A$1.02 billion) Eurobond loan repayment.
Experts are unsure how the country of 6.5 million people will be able to afford this, especially as Mr Bukele was banking on bitcoin hitting six figures this year.
The small Central American country is said to be in talks with China to sign a free-trade agreement, which might including China paying off US$21 billion worth of its foreign debt.
Mr Bukele used to have a Twitter profile picture where lasers were coming out of his eyes, which represents his support for bitcoin.
Although he has since changed his profile picture, he still appears to be a super fan of bitcoin despite the collapse of one of the country’s leading crypto exchanges, FTX.
In recent days, it’s come to light that FTX was mismanaged by its leadership team with the firm’s founder, Sam Bankman-Fried, using customer funds to prop up one of his other companies.
It has been equated to a Ponzi scheme but Mr Bukele said the name of bitcoin shouldn’t be dragged down with it.
“FTX is the opposite of bitcoin,” he said on Monday.
“Bitcoin’s protocol was created precisely to prevent Ponzi schemes, back runs, Enrons, Worldcom’s, Bernie Madoffs, Sam Bankman Frieds … bailouts and wealth reassignments.
“Some understand it, some not yet. We’re still early.”
Last year, Mr Bukele made the decision to make the cryptocurrency legal tender and announced plans to build a bitcoin city.
In June, El Salvador voted to become the first nation in the world to adopt bitcoin as legal tender. With 62 out of 84 possible votes, politicians voted in favour of the move to create a law to adopt bitcoin for everyday use.
The law came into effect on September 7, 2021.
Mr Bukele kickstarted the initiative by buying 400 bitcoins.
He gave $30 for each citizen who adopted the currency in a bid to promote it.
The bill was approved within 24 hours of being presented to El Salvador’s Congress – the president Bukele’s allies have held a majority since March last year.
It caused widespread protests and fears that it would destabilise their economy.
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