Despite some severe warnings, prices for Bitcoin and other cryptocurrencies have risen during the last few months after a lull in the market during summer.
The bitcoin price reached a record high of $69,000 in November before reversing. Other significant cryptos have seen much more significant gains than bitcoin during the past year. These include ethereum, Binance’s BNB, Cardano, Solana, and Ripple’s cryptocurrency XRPand are making the total cryptocurrency market capitalization to a record of $3 trillion.
Then, Samson Mow, chief strategist of Blockstream, a blockchain technology company Blockstream has stated that El Salvador’s volcanic-powered bitcoin-backed bonds to aid the price of bitcoin climb to 1 million for each bitcoin within five years.
“If bitcoin at the five year mark reaches $1 million, which I think it will, [El Salvador] will sell bitcoin in two quarters and recoup that $500 million,” Mow said. As reported in Reuters, Mow spoke with Nayib Bekele, president of El Salvador, on Saturday and explained how El Salvador could use bitcoin to fund its bonds.
“If you get more 100 countries to do these bonds, that’s half of bitcoin’s market cap right there,” Mow said. Mow, in a statement, noted the “game theory” on the bonds gave the first issuer El Salvador an advantage. After ten bonds have been sold, an estimated $5 billion worth of bitcoin would disappear from the market for years.
“This will be going to make El Salvador the financial center of the world,” Mow added.
El Salvador’s “volcano bonds”–designed to finance the construction of a new, low-tax “bitcoin city,” powered with the energy of the nearby volcano — will be U.S. dollars-denominated 10-year bonds with an interest rate of 6.5 percent.
“Invest here and make all the funds you need,” Bukele said to the people attending an event that concluded an entire week of promotion for Bitcoin at El Salvador and likening his strategy to cities established on the initiative of Alexander the Great.
However, the traditional finance world appears to affect El Salvador’s volcanic-powered bitcoin bonds negatively. Big-name investors say to The Financial Times that the plan could mean that the country will not access traditional credit markets.
“I don’t know who will be going to buy these bonds, but it sure as heck isn’t going to be us,” Kevin Daly, the fund director at Aberdeen Standard Investments, told The Financial Times.
Additionally, another organization, the International Monetary Fund (IMF), has discussed a $1.3 billion deal to loan El Salvador, warning El Salvador its adoption of bitcoin as a legal currency will increase risks for consumers and financial institutions.
“Given bitcoin’s high price volatility, its use as a legal tender entails significant risks to consumer protection, financial integrity, and stability,” IMF staff said in an official statement in connection with a visit within Central America. Central American country.
