After a very long, pro-Bitcoin El Salvador President Nayib Bukele gave a public interview with Tucker Carlson of Fox News. Under Bukele’s administration, The LAtAM nation made Bitcoin a legal tender last year.
Since then, the Latin American country has been accumulating Bitcoin as part of its Treasury. During his latest interview, President Bukele slammed the U.S. Federal Reserve calling it immoral. He also accused the U.S. central bank of robbing the common man of their wealth. The El Salvador President said:
“The Federal Reserve is nothing federal and has no reserves. They rob you from your wealth and from your savings and that’s immoral. It’s not only immoral but it also destroys some basic economic principles like saving.”
El Salvador has been criticized by governments and leading institutions like IMF for making Bitcoin a legal tender. They have also received some flak for their plans of floating Bitcoin bonds and their work on a Bitcoin city.
Amid Bitcoin entering a strong correction this year, El Salvador is facing huge losses over its Bitcoin holdings. As per the data from the Nayib Tracker, the country has spent more than $107 million. The value of the same has reduced to literally half at $57 million.
But in an interview earlier this year, El Salvador’s Finance Minister Alejandro Zelaya said that the Bitcoin strategy is working fine. He also said that it would take time for the results to reflect.
El Salvador Developments Doesn’t Share Bitcoin Records
Although the Latin American country has been claiming that things are going fine with its BTC strategy, the El Salvador Development Bank has refused to share its Bitcoin records.
The country’s Anti-Corruption Legal Advisory Center (ALAC) shared a document from the bank wherein it noted that it cannot share “confidential” information. ALAC reported:
Last September @BANDESAL refused for the second time to provide information on the purchase and sale of Bitcoin by the Salvadoran government, alleging reserve and contrary to the principle of maximum publicity and proportionality.
BANDESAL is responsible for managing funds on behalf of the government for their Bitcoin projects. ALAC further criticized BANDESAL adding: “The confidentiality limits the possibility for citizens to access and receive information on the operations carried out with public funds by BANDESAL”.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Image source: Getty Images
Elon Musk isn’t helping less-wealthy investors by continuing to pump a high-risk crypto.
Key points
- Dogecoin is down over 90% from its all-time high and many investors are underwater.
- Elon Musk claims he continues to support Dogecoin because less wealthy people want him to.
- However, some investors are pursuing a lawsuit that claims Musk pumped DOGE when it had no real value.
Dogecoin (DOGE) is many things to many people. Some see it as their golden ticket — a chance to win big and make their fortune. Others see it as a way to be part of a fun community. Elon Musk, billionaire and self-proclaimed Dogefather, has his own reasons. He originally said he liked Dogecoin because fate loves irony and the most ironic outcome would be for a joke crypto to become the currency of the future.
Now he says he’s only supporting it because people who are less well-off have asked him to. In June, Musk told Bloomberg, “I just know a lot of people who are not that wealthy who, you know, have encouraged me to buy and support Dogecoin.” Honestly? If you want to help people who aren’t as wealthy as you are, give money to charity. Don’t pump a high-risk investment.
The Musk effect
Several celebrities jumped on the DOGE bandwagon but none have been quite as dedicated as Musk, who’s been tweeting about Dogecoin since 2019. DOGE’s price reached its all-time high shortly before Musk appeared on Saturday Night Live last May. The pre-show frenzy drove its price to an unsustainable level. It has never recovered.
If you’d bought $500 worth of DOGE on May 6, 2021, it would be worth around $50 today. The token is down over 90% from its all-time high. And according to data from IntoTheBlock, just under half the people who currently own Dogecoin are underwater on their investments. That means their assets are worth less than they originally paid for them.
Other cryptos face similar price drops. But cryptos that were designed with a purpose in mind have a much better chance of eventual recovery. Unlike, say, Bitcoin (BTC) and Ethereum (ETH), Dogecoin doesn’t have much in the way of utility. There are no guarantees, and even crypto giants have their own issues to overcome. All the same, it is hard to see how Dogecoin investors will ever recover their money, particularly as its price didn’t follow many top cryptos that hit new highs last November.
A salutary tale
One high profile Dogecoin retail investor believes the good times will return. Nicknamed the SlumDoge Millionaire, Glauber Contessoto used his life savings of $188,000 to buy DOGE in February, 2021. He sold his Tesla and Uber stocks to buy the token. And he did so in part because of Musk’s social media promotion.
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In a matter of months, his holdings were worth almost $3 million. Contessoto became somewhat of a poster boy for the ordinary people who’d made it big with Dogecoin. He did interviews with the New York Times and other outlets, and told them he wasn’t planning on selling. He didn’t.
More recently, he said his holdings were worth around $230,000 and admitted he regretted not taking profits. “While I’m still up on my initial investment, what I do regret is not taking out some of the profit as cash,” he wrote in a Newsweek article. “If I could go back in time, I probably would have taken out $1 million or $500,000.” He remains hopeful DOGE will recover.
Other investors can’t even say they’ve broken even. They feel betrayed by Musk. Some have mounted a $258 billion lawsuit against Musk and various of his companies. Originally tabled by one disgruntled investor, other investors have now joined the fray. The suit claims Dogecoin investors have lost over $80 billion and that Musk presented Dogecoin as a legitimate investment “when it has no value at all.”
Does Dogecoin have a future?
Dogecoin has come a long way. Originally created as a joke, the token now has an $8 billion market cap and the Dogecoin Foundation is working hard to retroactively engineer a purpose for what was once a joke crypto. On the plus side, it is a recognized brand — more so than many other digital currencies, and the foundation has made some progress on several fronts.
Dogecoin could gain traction as a form of payment. The foundation is working to, for example, actually register its trademark, and push through necessary technological developments. But it faces stiff competition, not only from within the crypto world, but also from outside.
For example, the U.S. government is considering its own digital dollar. These so-called govcoins or central bank digital currencies (CBDCs) could threaten payment cryptos. CBDCs would go against a lot of the original ideology behind Bitcoin. But they’d also offer many of the benefits — low fees and speedy transactions — without the volatility and risk.
Musk loftily claims he continues to support Dogecoin for the people. But he’s not helping the Dogecoin Foundation to actually build a future for the coin. It was originally said that one of his advisors, Jared Birchall, would represent Musk on the foundation’s advisory board. But Musk tweeted that this is not the case, and neither he, nor Birchall have any connections to the organization.
If you only have a small amount of money to spare, don’t gamble it on a high-risk crypto. Look for low-risk investments that can help you build wealth for the long term. It’s one thing to buy crypto and hold a small amount as part of a balanced portfolio, but it’s quite another to go all in on Dogecoin because Elon Musk tweeted about it.
Bottom line
Musk played a significant part in pushing the price of a token with no utility to unsustainable highs. It is possible that Dogecoin can recover, but it’s unlikely. The whole industry now faces an uphill battle. Not only does Dogecoin have no strong foundations from which to fight, Musk isn’t doing much to help it.
Sadly, it’s the retail investors who got caught up in the frenzy created by a billionaire who will ultimately lose their hard-earned money. That’s why Musk’s I’m-doing-it-for-the-people message is both immoral and way off-key.