Sudden Delay in Bitcoin Bond Launch
The Salvadoran government has announced a postponement of its much-anticipated “Volcano Bond.” Originally scheduled for mid-March, the launch has been halted, with Finance Minister Alejandro Zelaya citing market volatility as the culprit. According to Zelaya, geopolitical tensions, specifically the Russia-Ukraine crisis, have led to dreadful market conditions.
The Market Rollercoaster
As of now, Bitcoin is trading at $42,236, which is a bright spot compared to its performance over the last month, registering a 10% increase. However, let’s keep it real: Bitcoin has seen a nearly 50% drop since El Salvador first introduced the bond concept back in November.
Quotes to Remember
In a chat with a local TV station, Zelaya emphasized,
“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 to the international market, it is difficult to raise capital.”
Talk about timing!
What Was the Plan?
The bond was aimed at raising $1 billion, with plans for an alluring 6.5% coupon and a Bitcoin dividend promising 50% of the gains after five years. A cool chunk of the proceeds was intended for the construction of “Bitcoin City,” powered by geothermal energy from the country’s famed volcanoes. Energy and excitement—what more could you ask for?
New Bitcoin Purchases on Hold
Adding to the drama, there’s been a noticeable slowdown in El Salvador’s Bitcoin acquisitions. Previously, the government was on a Bitcoin buying spree, snagging new coins each month, but there have been no announcements since January. It seems that the government is quite literally waiting for a better “buying dip.”
Looking Ahead: What’s Next?
As the economic landscape shifts, all eyes will be on El Salvador as they navigate this turbulent market. Will September bring a revived bond offering? Or will it stay in the vault for a longer period? Only time—and the markets—will tell.
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