- The government of President Nayib Bukele delayed until September the launch of the crypto bond that will serve to finance the construction of Ciudad Bitcoin.
- Due to the low price of Bitcoin and the negative outlook for the cryptocurrency, the Salvadoran government has decided not to buy more bitcoins for now.
Reports suggest that the Salvadoran government is slowing down the purchase of new Bitcoin tokens. Since the last purchase in January of this year, the administration of President Nayib Bukele has not reported any new acquisitions of the cryptocurrency.
This week it was also known that the Salvadoran government will not launch the Volcano bonds in March as scheduled. The issuance of the 10-year bond was delayed to September pending better conditions for Bitcoin (BTC), which is going through a losing streak this year.
The information on the postponement of the launch of the Volcano bond was released by the Minister of Finance, Alejandro Zelaya. Generally, when the government makes announcements about Bitcoin, it is President Nayib Bukele who delivers the good news.
During an interview on local television, Zelaya suggested that the delay in the launch of the Volcano bond was due to the volatility of the cryptocurrency as a result of the Ukraine War, among other factors that are affecting the crypto market.
“Now is not the time to issue the bond [...] In May or June the market variants are a little different. At the latest in September. After September, if you go out on the international market, it is difficult to raise capital,” Zelaya was quoted as saying by Reuters. This Bitcoin-backed bond will serve to finance the construction of Bitcoin City and other infrastructure works in the Central American country.
On the Flipside
- The sharp drop in the price of BTC this year and its volatility have raised doubts about El Salvador’s monetary policy based on cryptocurrency.
- El Salvador closed 2021 with almost 1,400 Bitcoin to its belt. Then on January 22, Bukele announced the purchase of another 410 bitcoins for $15 million.
- Since the initial Bitcoin bond announcement in November, the price of the cryptocurrency has plummeted nearly 50%.
On Wednesday at 08:43 pm (New York time) BTC was trading at $42,999, according to Coindesk.
The launch of the Volcano bond of $1,000 million was scheduled for the middle of this month. Salvadoran legislator William Soriano said in February through his Twitter (NYSE:TWTR) account that the bonus could be available in the second or third week of March.
The bond will be marketed with a 6.5% coupon and the five-year profit projection is 50%, as reported by President Bukele in September when he first announced the product.
500 million dollars of the proceeds from the Bitcoin bond will be used to build Bitcoin City and the remaining $500 million will be invested in the purchase of more bitcoins.
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