Bitcoin (BTC), El Salvador's lucky charm?

Although volatile, bitcoin is unwinding the red carpet in El Salvador. Since the legalization of the flagship cryptocurrency in 2021, the country of Nayib Bukele has seen its statistics climb gradually. This bet is certainly risky, but it allows several rewards to the bold Salvadoran president: rise in the tourism sector, arrival of investors… And lately, increase in the yield of international bonds of El Salvador.

El Salvador bonds on the rise

If one day, the bitcoin price were to climb to reach the $1 million predicted by Cathie Wood, El Salvador will lose its label of “developing country”. THE 2,546 BTC in his wallet account for about $76 million over $30,000 of the latter.

Imagine that Wood’s prediction comes true: this will represent 2.546 billion dollars in the hands of the Salvadoran Treasury.

While waiting for these auspicious days, Reuters revealed another counter explosion signed by Salvador. ” It’s the end of bitcoin, the sovereign bonds of El Salvador have not finished talking about them “, headlined this multimedia specialist.

This article published on July 19 speak a 60% increase in returns for investors in Salvadoran international bonds for this year 2023.

CoinDeskfor its part, specified that this increase is estimated at 62%%. Last Wednesday, El Salvador bonds were trading at 72 cents on the dollar.

Compared to Invesco Emerging Markets Sovereign Debt ETF (PCY), one of El Salvador’s largest debt holders, the performance of thebond 2041 surprised more than one.

Additionally, data from Refinitiv highlighted spreads of 1,022 basis points over US Treasuries.

Right now, El Salvador dollar bonds are yielding between 14% and 18%. Note, however, that the 60% mentioned above concern the total returns in the first half.

Chart comparing the price of BTC with that of Salvadoran bonds – Source: TradingView

Riding the bitcoin wave

Like Robert F. Kennedy (USA), Javier Gerardo Milei (Argentina), Nayib Bukele counts make bitcoin a springboard in the race for the highest office from his country. Of all these three candidates, Bukele is the only one to run for a second term.

What did he do with the queen of cryptocurrencies? And what does he plan to do with her? First, he urged his followers to legalize bitcoin in June 2021. Then, he presented no less interesting projects around the BTC. There are the “Volcano Bonds”, “Bitcoin City”, Bretton Woods of bitcoin, etc.

Consequences: the tourism sector in El Salvador shows good results. Last December, the Salvadoran State arrived at clear $800 million of bonds. While the IMF, some American elected officials, and many others have predicted the collapse of the local economy with this stubbornness with bitcoin.

If there is one lesson to be learned from Nayib Bukele and his entire administration, it is patience. Who among its detractors would have believed that bitcoin would go up the slope? Since January, it has increased by more than 80%. A realization more or less similar to that of the bonds of El Salvador.

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