As bitcoin craters 65% from its high, El Salvador's finance minister said the fiscal risk is 'extremely minimal'
- Since El Salvador made bitcoin legal tender last September, the crypto token has plunged in value.
- The country, led by bitcoin-bull President Nayib Bukele, holds 2,301 bitcoins, per Bloomberg data.
Bitcoin has cratered as investors shed riskier assets amid Fed rate hikes, and El Salvador has seen its token holdings plunge.
The Central American country — which made the cryptocurrency legal tender in September — has purchased 2,301 bitcoins since then, per Bloomberg data. In that time, the token has dropped about 50% and is now at its lowest since 2020.
Still, El Salvador's Finance Minister Alejandro Zelaya expressed little concern Monday.
"When they tell me that the fiscal risk for El Salvador because of Bitcoin is really high, the only thing I can do is smile," Zelaya said at a press conference, Reuters reports. "The fiscal risk is extremely minimal."
He cited an earlier estimate from Deutsche Welles that said El Salvador's portfolio had lost $40 million in value: "Forty million dollars does not even represent 0.5% of our national general budget."
On Tuesday, the price of one bitcoin continued to sell off, falling 2.3% to about $22,667. It's now about 65% below all-time highs. On Monday, the entire cryptocurrency market dipped below $1 trillion for the first time since February 2021, after soaring above $3 trillion last year.
After previous sell-offs, El Salvador has increased its bitcoin holdings. In October, El Salvador bought 420 bitcoins at roughly $60,300 per token, which crypto bull President Nayib Bukele announced on Twitter.
More recently on May 9, the millennial president tweeted: "El Salvador just bought the dip!" He added that the government snapped up another 500 coins at roughly $30,744.
The crypto market has largely tracked stocks this year, which have been throttled by Fed rate hike concerns. Investors have fled from positions in so-called risk assets, and analysts say Wednesday's central bank announcement could rock markets further.