El Salvador's bitcoin holdings value slashed in half by sell-off
FILE PHOTO: A sign reads "Bitcoin accepted here" outside a coffee shop where the cryptocurrency is accepted as a payment method in San Salvador, El Salvador May 15, 2022. REUTERS/Jose Cabezas
LONDON: El Salvador's bet on bitcoin was slashed on Tuesday by half as the more than US$100 million in the country's publicly disclosed purchases dropped more than 50 per cent in value.
The 10 purchases announced by President Nayib Bukele via Twitter have a market value of just over US$51 million, with the biggest single trade - 420 coins at more than US$59,000 per coin - down almost 63 per cent.
Bukele has said on Twitter at least four times that El Salvador has bought a "dip", a term used by traders to mean they took advantage of a price dislocation that resets for a quick gain.
One of the "dips" Bukele said El Salvador bought was 420 coins for more than US$59,000 each in late October, a total of almost US$25 million that is now worth US$9.5 million.
The government didn't respond to a request for comment on the value of its bitcoin portfolio.
The amounts, both the investment and the loss, are only a fraction of the US$3.65 billion that the Central America nation held in foreign exchange reserves as of last month, according to credit rating agency DBRS Morningstar.
The country has US$7.65 billion in marketable debt outstanding according to Refinitiv data. An US$800 million payment is due in January, on a bond that is trading at 73.5 cents on the dollar and yielding 67.6 per cent.
"Bondholders are no wiser on how bond payments will be made," Siobhan Morden, head of Latin America fixed income strategy at Amherst Pierpont Securities, said in a note on Tuesday.
"The monthly fiscal data do not yet show an obvious trend shift, with the pace of spending less than revenue growth, but not yet enough to markedly reduce the structural fiscal deficit."
