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IMF Warns El Salvador Against Using Bitcoin as Legal Tender After ‘Bitcoin City’ Announcement

23/11/2021 by Idelto Editor

IMF Warns El Salvador Against Using Bitcoin as Legal Tender Following 'Bitcoin City' Announcement

The International Monetary Fund (IMF) has warned El Salvador against using bitcoin as legal tender due to various risks associated with cryptocurrency. The warning came one day after Salvadoran President Nayib Bukele announced his plan to build a “bitcoin city” powered by a volcano and financed by bitcoin bonds.

IMF Says El Salvador Shouldn’t Use Bitcoin as Legal Tender

The International Monetary Fund (IMF) warned El Salvador on Monday that the country should not use bitcoin as legal tender, citing various risks associated with the cryptocurrency.

El Salvador is the first country in the world to adopt bitcoin as legal tender alongside the U.S. dollar which it has used for two decades. The country’s bitcoin law went into effect in September. Furthermore, El Salvador has purchased 1,120 BTC, according to Salvadoran President Nayib Bukele.

The IMF regularly undertakes Article IV missions to member countries to consult with government officials before they request to use its resources. The IMF explained that for El Salvador, “The adoption of bitcoin as legal tender, the regulation and supervision of bitcoin services providers, and e-wallet Chivo were also discussed.”

In its “Staff Concluding Statement of the 2021 Article IV Mission” for El Salvador, the IMF detailed:

Given bitcoin’s high price volatility, its use as a legal tender entails significant risks to consumer protection, financial integrity, and financial stability. Its use also gives rise to fiscal contingent liabilities. Because of those risks, bitcoin should not be used as a legal tender.

The IMF proceeded to recommend “narrowing the scope of the bitcoin law” and urged El Salvador to strengthen “the regulation and supervision of the new payment ecosystem.”

The recent statement from the IMF came one day after President Bukele announced a plan to build the world’s first bitcoin city powered by a volcano and financed by bitcoin bonds. He noted there would not be any taxes in the bitcoin city except for value-added tax (VAT).

“The plans to issue sovereign bonds and use the proceeds to buy bitcoin and fund infrastructure plans announced on November 20, occurred after the technical work of the mission concluded, and were not discussed with the authorities,” the IMF clarified.

Commenting on the IMF’s statement, Bukele said:

Although we obviously do not agree on some things, such as the adoption of bitcoin, the analysis it makes of our country is interesting.

What do you think about the IMF advising El Salvador against using bitcoin as legal tender? Let us know in the comments section below.

Billionaire Fund Manager Jeffrey Gundlach Convinced Bitcoin Will Fall Below $23K, US Dollar Is ‘Doomed’

18/07/2021 by Idelto Editor

Doubleline Capital CEO Jeffrey Gundlach, also known as the “Bond King,” has predicted that the price of bitcoin will fall below the $23K level. “Right now, the chart on bitcoin looks pretty scary,” he said, adding that “it looks like a massive head-and-shoulders top.”

Jeffrey Gundlach Expects Bitcoin’s Price to Fall Below $23K

Billionaire fund manager Jeff Gundlach talked about his outlook for bitcoin and the U.S. dollar in an interview with CNBC Thursday.

Gundlach is the CEO of Doubleline Capital, with had over $135 billion in assets under management (AUM) as of March 31. He is sometimes referred to as the “Bond King” after he appeared on the cover of Barron’s in 2011 as “The New Bond King.” Institutional Investor named him “Money Manager of the Year” in 2013 and Bloomberg Markets named him one of “The Fifty Most Influential” in 2012, 2015, and 2016. According to Forbes, Gundlach’s net worth is currently $2.2 billion.

He said: “Right now, the chart on bitcoin looks pretty scary. It’s dropped a lot from $60,000 down to around $31,500, and it looks like a massive head-and-shoulders top.” At the time of writing, the price of BTC stood at $31,616, based on data from Bitcoin.com Markets. The Doubleline CEO added:

I’m not a big believer in head-and-shoulders tops, but this one looks pretty convincing. Turning neutral at $23,000 was obviously too early, but I’ve got a feeling you’re going to be able to buy it below $23,000 again.

Gundlach also commented on other investments. “Interestingly, gold is actually negative this year. Commodities are very strong. Commodities are up more than stocks this year as a basket. But gold can’t seem to get out of its own way. And obviously, the dollar being firmer lately is not positive for gold either,” he opined.

Moreover, the billionaire fund manager said that “The dollar has been moderately firmer in the last several weeks, and that will continue,” elaborating:

In the near term, the dollar seems firm. In the longer term, the dollar is doomed.

The Bond King believes that a significant drop in the dollar is coming in the intermediate term, citing the size of the U.S. deficit.

Gundlach said in November last year that bitcoin and gold were good as hedges against inflation. Furthermore, he predicted that within 18 months, the stock market was “going to crack pretty hard,” stating, “When the next big meltdown happens, I think the U.S. is going to be the worst-performing market, actually, and that’ll have a lot to do with the dollar weakening.”

What do you think about Jeffrey Gundlach’s prediction? Let us know in the comments section below.

Fed Chairman Jerome Powell Says Bitcoin Is a Substitute for Gold

22/03/2021 by Idelto Editor

Federal Reserve Chairman Jerome Powell sees cryptocurrency as a substitute for gold, rather than the dollar. However, he cautioned that crypto assets, including bitcoin, are highly volatile and not useful as a store of value.

Fed Chair Sees Bitcoin as a Gold Substitute

During a webinar sponsored by the Bank of International Settlements (BIS) on Monday, Federal Reserve Chairman Jerome Powell talked about cryptocurrency, mentioning bitcoin in particular.

The Fed chair detailed: “Crypto assets are highly volatile, see bitcoin, and therefore are not really useful as a store of value. And, they are not backed by anything. They are more of an asset for speculation. They are also not particularly in use as a means of payment.” He elaborated:

It’s more a speculative asset. It’s essentially a substitute for gold, rather than for the dollar.

Powell proceeded to say that with crypto assets, “the public needs to understand the risks. The principal thing is there’s the volatility. There’s also the outsized energy requirement for mining, and the fact that they’re not backed by anything.”

What do you think about what Fed Chair Powell said? Let us know in the comments section below.