El Salvador rewines crypto whales because traditional investors avoid bitcoin bonds

The Bitcoin-supported bond from El Salvador in the amount of 1 billion

The demand of Bitcoin "Walen"-investors who hold large quantities of the world's largest cryptocurrency-should be of crucial importance according to the persons involved in the efforts.

Paolo Ardoinino, Chief Technology Officer at Bitfinex-which is supposed to provide the technical platform for the deal-said that the crypto exchange was given "half a billion dollars" of its users. Important details of the bond must be ironed out, which requires the adoption of new securities laws in El Salvador before potential buyers show their interest.

"Some of our users have turned to us to express their interest. They are definitely interested in participating, but they are waiting for the details to be published," said Ardoinino. He added that the stock exchange was not involved in marketing the bond.

The emission of the debt title of El Salvador takes place a little more than a year after the country with the enthusiastic support of President Nayib Bukele was the first country of Bitcoin as a legal means of payment.

The so-called volcanic bonds-half of which is invested in Bitcoin, while the rest of the construction of a "Bitcoin city" flows at the foot of the Conchagua volcano-could offer the government of Bukele a financial lifeline, since the doubts about sustainability increases.

Optimism in the crypto community for the offer that is the first of its kind of a sovereign borrower is in a sharp contrast to most major investors who have explained that they are very skeptical about the deal.

In our opinion, the effects of Bitcoin in El Salvador have so far been to increase macroeconomic potential risks instead of significant changes in the way in which economic transactions are carried out

Buyer of the Bitcoin bond-which offers an annual interest rate of 6.5 percent and a share of any upward potential from the revenues invested in Bitcoin-would offer El Salvador a financing at affordable conditions, the existing 10-year-old bonds currently renew over 20 percent.

These returns have risen sharply, since most investors disapproved of the experiments of Bukele with cryptocurrencies and warned that the Bitcoin bond El Salvador could further displace access to the traditional debt markets and impair its relationship with the IMF.

"In our opinion, the effects of Bitcoin in El Salvador have so far been to increase the potential macroeconomic risks instead of causing a significant change in the way in which economic transactions are carried out," wrote analysts of Barclay's last week.

Potential buyers of the bond from El Salvador also lack basic information about the legal framework for the tokens or which company it will issue.

People who are close to the project rely on the fact that large actors in the crypto community will see the bonds despite the relatively low returns and uncertainties that they surround as an attractive investment.

el Salvador has suggested that the bond emissions also be opened to small investors, but the scope of marketing is still in the air.

"There is a lot of wealth that is outside the banking system and wants to stay outside," said an industry leader who has experience in working with Bitfinex. For these investors, crypto -friendly access to government bonds is attractive, "even if they achieve fewer returns".

Potential investors were attracted to the status of the Bitcoin bond as a "world first", said project participants. "There is a desire to be part of something so groundbreaking," said one.

But the procurement of capital for Bitcoin bonds faces discouraging hurdles after the government has announced a delay that questions the schedule and the future of the emission-with important details are still unclear. The sale was originally planned for March, but was delayed.

Bukele blamed the need to advance the pension reform, while his finance minister Alejandro Zelaya claimed last week that the market conditions were responsible for this and the emission was still ready to start. Zelaya also confirmed that the government is planning to issue the bond about La Geo, a state -supported thermal energy company.

"There seems to be little chance of a transaction in the foreseeable future," said the analysts of Barclays.

According to Ardoinino, more detailed details on the conditions of the bond have to wait until the government has passed its securities legislation.

"The time frame for this could range from one week to a few months. This is the main blocker for us to get forward," he said.

Even if many traditional investors are betting that Bukeles Bitcoin-Push El Salvador further away from the IMF and drives closer to the edge of bankruptcy, some hope that crypto retailers will offer the country a leash.

"The Bitcoin community does some bizarre things," said Bradley Wickens, founder of Broad Reach, a hedge fund for emerging countries that holds some conventional bonds from El Salvador. "If you end up offering a financing route without the IMF, the El Salvador's fate could completely change in the next few years."