Bitcoin took another wild ride on Tuesday, briefly turning positive before resuming its decline as speculators tried to price in the possibility of even more aggressive Federal Reserve interest rate hikes to combat inflation, as well as the ramifications of the lending platform Celsius’s withdrawal halt.
The largest digital currency was down about 5% to $22,053. It had fallen to $20,816, the lowest level since December 2020. Ether was down around the same amount, but altcoins like Solana, Avalanche, and Polkadot were all over the place.
As monetary policy tightens around the world to combat inflation, cryptocurrencies have become symptomatic of a flight from speculative assets, draining liquidity from global markets. Each collapse prompts the inevitable debate of whether now is the ideal time to buy the dip because a nadir could be on the horizon.
El Salvador hasn’t lost any money on its Bitcoin holdings since it hasn’t sold them yet, according to the country’s finance minister. El Salvador’s finance minister stated on Monday that the recent crypto market meltdown offers an “extremely minimal” fiscal risk to the country, which has purchased millions of dollars in Bitcoin for its treasury.
According to a Deutsche Welle report, El Salvador’s finance minister, Alejandro Zelaya, said at a news conference, “When they tell me that the fiscal risk for El Salvador because of Bitcoin is really high, the only thing I can do is smile.”
“Any serious economist should feel the same,” he said, “because it’s really a very superficial analysis and they’re really speaking from ignorance,” adding that “the fiscal risk is extremely minimal.”
Since last year, the market value of Bitcoin purchased by the government of El Salvador has dropped from around $103 million to around $50 million as of today.
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