The project’s success will depend on investor excitement, but so far, institutions have remained largely skeptical. The country’s president hopes to raise $1 billion to buy more BTC and fund his Bitcoin City.
Following El Salvador’s decision to adopt Bitcoin (BTC) as legal tender in 2021, the country has been working on releasing a new investment product — Bitcoin Bonds. However, months after the El Salvador government moved to allow payments using BTC, we are seeing mass skepticism regarding these bonds.
Institutional investors Remain Skeptical of the New Bitcoin Product
This is not the first time that El Salvador is facing resistance to its embrace of crypto. Back when the country’s president first announced that he wanted to make it possible to use Bitcoin for payments, he was immediately advised not to do so by a number of global heads of state. He then had to face protests within his own nation, as many incorrectly assumed that they would be forced to transact in Bitcoin.
But this was not the case. And after the president explained his intention was to merely add BTC payments to existing payment channels, the uproar died down. However, skepticism remained. And this might not bode well for the new El Salvadorian bonds, as the success of new bonds will depend on the sentiment of retail and institutional investors alike.
Bitcoin Bonds Bound for Failure?
President Nayib Bukele hopes to raise $1 billion, which will be used for buying even more BTC and funding the creation of a so-called Bitcoin City. The city is designed to be powered by geothermal energy and will rely on emerging technologies.
Any remaining revenue from the BTC bond sales will be used to pay off the country’s existing debt, which has been a consistent struggle for the government.
While the El Salvador crypto bulls are willing to give the BTC Bonds a chance, a former executive of the country’s central bank, Carlos Acevedo, believes that Bitcoin Bonds are bound to be a failure. Skeptics believe that Bukele’s attempts to raise hype about Bitcoin have mostly failed, and his secrecy regarding the purchase of BTC for the city has also been frowned upon.