El Salavdor’s Treasury Minister, Alejandro Zelayasaid that they could not issue the volcano bonds in the country because of the price disruption of Bitcoin. According to the Treasury Minister, the conflict between Russia and Ukraine is the reason behind the disruption in Bitcoin prices in international markets. The purpose of issuing the volcano bonds was to accumulate funds for financing the Bitcoin City, plans of which had been announced by El Salvadorian President NayibBukele last year. Geopolitical concerns and the Russian invasion has taken its toll on the performance of the crypto market, like other markets around the world.
According to Zelaya, a number of people had withdrawn their funds from the crypto space because of Russia’s conflict with Ukraine and had directed them to other industries. He stated that a lot of people had decided to make investments in the arms industry when the conflict broke out. Likewise, some people also chose to direct their investment in pharmaceutical companies, while others looked to do the same in companies manufacturing agricultural supplies. In all of these instances, he said that funds had been taken out of the crypto space. Therefore, Zelaya emphasized that it was not the right time for El Salvador to issue their volcano bonds.
If El Salvador had stuck to its schedule, these bonds should have been released in the first three months of 2022. They have been designed to raise finance for the plans of Bitcoin City and their operations will utilize geothermal power energy only. Furthermore, Zelaya also spoke on the matter of experts who have directed criticism towards the county’s President NayibBukele for his decision to buy Bitcoin. Statistics reveal that there are more than 2,500 bitcoins in El Salvador’s wallet that was bought at different prices at different times.
The President of El Salvador, NayibBukele, had announced a number of times that they had ‘bought the dip’. According to Zelaya, they had not bought these bitcoins with the purpose of selling them, which means there is absolutely no loss that can be associated with the transaction. The only way they would make a loss is if they decide to exchange the bitcoins in question with other assets. He said that the critics only want to say that they have lost when there has not been a sale. He said that rather than selling the coins, they would wait and keep them until the price rises once more.
El Salvador had made history last year when it adopted Bitcoin as legal tender. The move had received mixed reactions from all over the globe. Most financial institutions, such as the International Monetary Fund (IMF) have issued warnings to El Salvador about the unstable nature of the crypto market, which could lead to disaster. However, President NayibBukele remains adamant that this is a smart move that will help the country as a whole and is very much in favor of purchasing more bitcoins because he believes the market will grow.