Bitcoin Crash: El Salvador on the Verge of Default as Its Bitcoin Holding Withers
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Over the past months, the Central American nation sunk over $100 million to build its controversial Bitcoin fortune. With the recent crash, this holding sits at roughly $38 million. The benchmark cryptocurrency slumped to the $25.4K low last Thursday, its lowest point since December 2020.
The economically-embattled nation adopted BTC as a legal tender in September 2021, despite warnings from global regulatory and financial institutions. That said, reports show that despite efforts and coercive measures introduced by the government, BTC has yet to gain meaningful adoption traction in El Salvador. A study by the National Bureau of Economic Research (NBER) revealed that 80% of companies in the Central American nation never adopted BTC in any form.
Analysts project that El Salvador will likely fail to secure financing from the International Monetary Fund (IMF). With an $800 million bond due for payment in January 2023, economists argue that the nation would likely default. On May 5, Moody’s downgraded the nation’s debt rating from a negative of Caa1 to Caa3.
Regardless, President Nayib Bukele remains steadfast in his support for the flagship cryptocurrency.
Key Bitcoin Levels to Watch — May 15
Bitcoin has eased off the previous bearish tensions as the benchmark cryptocurrency re-emerges above the $30K mark. The cryptocurrency recorded a decline from the $31K mark yesterday to the upper-$28K low. However, bears lacked the coordination to continue lower, triggering a rebound.
I expect to see a retest of the $31K level in the coming days and a possible return above the descending trendline. Regardless, market sentiment remains significantly bearish below the $35K – $31K axis, prompting some caution on placing bullish bets.
Meanwhile, my resistance levels are at $31,000, $32,000, and $33,000, and my key support levels are at $29,000, $28,000, and $27,000.
Total Market Capitalization: $1.29 trillion
Bitcoin Market Capitalization: $574.6 billion
Bitcoin Dominance: 44.4%
Market Rank: #1
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