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El Salvador’s Bitcoin Losses Swell to 28% as Bukele Buys More

·2 min read

(Bloomberg) -- President Nayib Bukele’s Bitcoin gambit is becoming onerous for cash-strapped El Salvador but that isn’t stopping him from adding to his stockpile.

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Bukele’s bought 2,301 Bitcoins for the government since making them legal tender back in September, based on his announcements on Twitter. That includes a purchase of 500 coins yesterday as their price plunged below $31,000, extending a wild six-month sell-off. Those tokens are worth $74 million today. That’s 28% less than the $103 million Bukele paid for them, according to calculations by Bloomberg.

Bukele has shown himself to be a true believer in crypto, winning attention and admirers from around the world in the process, and says he trades the nation’s stockpile of coins on his phone. The 40-year-old has said he will push ahead with plans to issue a $1 billion blockchain bond to fund the construction of Bitcoin City, an income and capital gains tax-free jurisdiction he hopes to create on the country’s coast.

Bukele tweeted pictures on Monday of a mockup for the planned city, which includes an international airport. It would use geothermal energy from a nearby volcano.

Bukele’s office didn’t return a message seeking comment. The government doesn’t publish data on its Bitcoin holdings, and the activities of a $150 million fund to back Bitcoin conversions at state-run bank Bandesal has been deemed confidential. The central bank declared information about remittances sent through the government’s Bitcoin wallet, Chivo, a state secret.

The Central American nation’s dollar bonds have plunged 24% this year, among the worst performers in JPMorgan’s emerging market bond index, as concern mounts that the government will fail to pay back $800 million of notes that come due in January. Moody’s cut the government’s credit rating to Caa3 last week, citing an increased risk of default.

(Adds table with El Salvdor’s Bitcoin purchases)

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