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4 Predictions About Bitcoin in El Salvador for 2024

Important facts:
  • The bull market will see the country make profits on its investments in Bitcoin.

  • The still skeptical population would give BTC a second chance.

El Salvador, the small Central American country that made a splash by adopting Bitcoin (BTC) as legal tender more than two years ago, will have a year in 2024 to advance its consolidation with the first cryptocurrency.

Beyond the social or macroeconomic successes that El Salvador is currently declaring, there are such four Factors that would promote this approach which Nayib Bukele started with Bitcoin in 2021. That's so characteristic “I told you” What the president expresses on social networks when some media outlets report on his country's socio-economic improvements could become a trend.

It would actually be a great year for Bukele if he wins the next presidential election, which would give his initiative a boost. Bring Bitcoin to every corner of El Salvador. This could happen through the installation of more BTC ATMs, more companies accepting Bitcoin, but also through the promotion of Bitcoin citadels or the arrival of new companies in the ecosystem.

Below are the four predictions that would occur in 2024 that would make El Salvador an increasingly Bitcoin nation.

Better perspective of the population on Bitcoin

Having already come a long way since its launch, Salvadoran citizens could change this negative attitude or uncertainty about dealing with Bitcoin given some setbacks in the use of the Chivo wallet and BTC ATMs.

In 2022, a report published by CriptoNoticias showed that 60% of citizens opposed the new Bitcoin law. Another report, this time from the Triple-A agency, assured This December, less than 2% of El Salvador's population owns Bitcoin or other cryptocurrencies.

Despite this situation, the percentages could improve in 2024 for several reasons: Bitcoin bull market, more experience with wallets, greater corporate adoption, etc better understanding of the technology.

Salvadoran journalist Will Monterroza, consulted by CriptoNoticias, admits that Bitcoin adoption is currently still low in the country. “On the street, people use dollars. Supermarkets and businesses are required by law to accept Bitcoin, but that’s not something I hear from people paying with Bitcoin,” Monterroza told this newspaper.

The communicator himself points out that there is an opportunity for growth next year that has to do with the issue of security. “As the gang siege no longer exists, people are being encouraged to start businesses, for example. This is a slow process, but it can stimulate the economy and become an opportunity, even for B. Mine Bitcoins or enable people to receive financial education“.

As for what can improve Bitcoin's prospects among Salvadorans in 2024, Monterroza made it clear when he said: “Education and distribution.” There was a push to launch the wallet (Chivo) two years ago, but then it was the habit is not created, if you don’t remind Salvadorans of things, they forget.”

El Salvador as an international Bitcoin hub

The attractiveness of foreign capital to develop businesses around Bitcoin in El Salvador is one of the flags that Bukele has raised since the launch began. The president himself has offered incentives to investors settling in El Salvador.

Some of these measures are: tax benefits, tax exemption, preservation permanent residence for entrepreneurs of cryptocurrencies and the launch of the Freedom Visa, a program that would benefit 1,000 people willing to invest at least $1 million in Bitcoin.

In addition, the Legislative Assembly recently passed a reform aimed at granting citizenship to those who contribute to the development of El Salvador. That means it would be an explicit nationality for Bitcoiners, as CriptoNoticias reported. The country then announced the repeal of one Company registration who are already doing business or would soon start doing so.

El Salvador has two operating geothermal plants that could be used for Bitcoin mining. Source: LaGeo / CriptoNoticias.

These are not just ventures in the style of Startups that they would come in to try their luck. Major companies are coming to El Salvador including: Alphapoint Global, Binance Services, Paxos Trust Company, Opennode, Koibanx, Athena Holdings and Ibex Mercado, to name a few.

In order for the country to become an international business center with Bitcoin, like any other country that wants to attract foreign investment, the following conditions should be met: a Favorable regulatory environment for companies working with Bitcoin (Bitcoin Law), invest in technological infrastructure (Chivo wallet, points of sale, BTC ATMs and internet connectivity) and promote El Salvador as a destination for Bitcoin companies.

It is important to remember that El Salvador competes with other cities or countries that also aim to attract this foreign investment, including Miami, Dubai, Singapore and Zug (Switzerland). El Salvador's advantage is that as a state it has a legal edge over its rivals. At the same time, the disbelief of those who initially doubted his Bitcoiner project is changing.

New improvements to risk assessment agencies

This has already happened in the past and could happen in 2024. El Salvador is targeting several flanks at once, it is not just about the adoption of Bitcoin, there are also announcements in the areas of social, security and restructuring of the economy. This is viewed positively by risk assessment agencies and major banks who claim this El Salvador leaves nothing to chance.

At least this is the position of the American bank JP Morgan, which emphasized in November this year that what is happening in the country is “not a question of luck.” The bank's positive assessment came after S&P Global Ratings rated the country at B- out of CCC+, an unusual increase seen in the past. The equally renowned agencies Moody's and Fitch Ratings have commented positively on this.

Even the Santander Group assured in September this year that Bitcoin plays an important role in the economic transformation that El Salvador is undergoing.

It is important to highlight these improvements among risk assessment agencies and banks, as some of them argued that this was precisely due to this Bitcoin introduction that the government would not pay its debts. Aspect that did not occur.

In fact, the country paid $800 million for Eurobond obligations in January this year. The payment of the debt caused such a reaction that a week later representatives of the International Monetary Fund (IMF) arrived in the country to meet with the Bukele government.

Nayib Bukele could be re-elected as president of El Salvador in the next elections in February 2024. Source: @NayibBukele / Twitter.

What perpetuates the narrative that El Salvador is a country that could return to the lowest credit ratings is due to the questions that its financing plan has received through the so-called “volcano bonds” and because, according to Fitch, the country's sources of financing are very limited.

Issuing “Volcano Bonds” or “Bitcoin Bonds”

The long-announced “Volcano Bonds” or “Bitcoin Bonds” could have a final outcome with their launch in 2024. It is about one unprecedented instrument in the financial world That could reshape El Salvador's economy.

The country wants to raise around $1 billion; With half of the money he would buy more Bitcoins and with the other half he would support the long-awaited Bitcoin City project, a city that will be located near Conchagua in southeastern El Salvador. The bonds would have an annual yield of 6.5%, would have a maturity of 10 years and anyone could participate with a minimum investment of $100.

Although there is regulatory progress in this regard, the issuance of the bonds is delayed. It was reported that some of the reasons for the delay were the strong Bitcoin bear market that prevailed until 2023 and at the time when the war broke out between Ukraine and Russia.

In May this year, businessman and Bitcoin ecosystem leader Samson Mow recommended Bukele wait for “better conditions” for issuing “volcano bonds.” These better conditions could arrive in 2024.

If Bukele is re-elected president, if Bitcoin realizes what is predicted to be a bull market, and El Salvador further improves its international perception, then the better conditions proposed by Mow would occur to open this financial product to the market.

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