After ratings agency Moody's issued a warning about the risk of El Salvador's credit rating being downgraded because of Bitcoin (BTC), President Nayib Bukele said on Twitter in big letters that "El Salvador doesn't care".
Last year, the Bukela government made bitcoin legal tender alongside the dollar. It also announced the purchase of at least 1,391 bitcoins with public funds, exposing the country to extreme cryptocurrency volatility. Moody's estimates that the country's bitcoin holdings are low following the recent fall in the price of BTC.
As a reminder, Moody's has not conducted any rating study recently. However, Moody's analyst Jaime Reushe told Bloomberg News last week that the investment raises the sovereign's credit outlook risk. In its decision to downgrade the country to Angola and Iraq, Moody's cited the country's unsustainable policies last year. But as a tweet from the country's president reveals, El Salvador doesn't care.
El Salvador in the thick of things
You probably didn't know much about El Salvador before the adoption of bitcoin. Despite that, the country has been in the media and international spotlight since the bitcoin law was introduced on September 7, 2021. This is what thecryptobasic.com writes.
This is not the first time Moody's rating agency has also drawn attention to what is happening in the country, which sees the danger in the government's bitcoin purchases. Moody's analyst Jaime Reushe said in an interview with Bloomberg that "government transactions in bitcoin certainly increase risk...Trading in digital assets is quite risky, especially for a government that has experienced liquidity difficulties in the past."
Naib Bukele, the president of El Salvador, clearly didn't like Moody's statements. On Twitter, he reacted vigorously to the statements, "BREAKING: EL SALVADOR DGAF", using the acronym "DGAF" "Don't Give A Fu.k".
In retrospect, the hardest step has already been taken. El Salvador is the first country to adopt bitcoin and use it as a currency and store of value.
This sets a precedent for other countries wishing to use BTC to run their economies. Perhaps this way they can avoid inflation caused by the creation of a large mass of money, as is the case with paper currencies.
In his predictions, Buquelet believes that at least two more countries will accept bitcoin as a means of payment this year.
However, not everyone has taken a positive view of El Salvador's decision. For example, the head of the IMF and the Bank of England has expressed serious concerns about El Salvador accepting bitcoin as legal tender. In the meantime, the government expects that the price of bitcoin will rise significantly in a few years. In this way, the government will not only be able to easily pay off the debts it has incurred, but also provide investors with additional income.
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