El Salvador, Lugano sign memorandum supporting initiatives to boost Bitcoin adoption
- The memorandum will enhance cooperation in education and research between the two lands.
- El Salvador has reportedly lost over $60 million in its Bitcoin experiment, with its debt-to-GDP ratio reaching 87%.
- Bitcoin is sustaining its price at $20,675; however, it remains vulnerable to a fallback to $18,600.
El Salvador created history last year when it became the first country to accept Bitcoin as a legal tender. Although the country aimed to become a major Bitcoin hub, building its economy around cryptocurrency, it hasn’t succeeded. The fall in price that began in November 2021 reduced Bitcoin’s price by more than 70%, affecting El Salvador significantly.
El Salvador is not backing down
According to a blog by Tether on Friday, The Salvadoran Ambassador Milena Mayorga announced that El Salvador and the city of Lugano signed a memorandum. Called the Memorandum of Understanding on Economic Cooperation, the partnership is crucial for Bitcoin in both these regions.
As per the expected goals of this memorandum, El Salvador and Lugano will be improving cooperation in the field of education and research. Along with this, initiatives that enhance the adoption of Bitcoin and other crypto assets within these places will also be supported.
The Mayor of Lugano, Michele Foletti, commented on the partnership stating,
“today’s historic announcement… is great news for believers of financial freedom and the power of cryptocurrency. This joint endeavor will benefit the citizens of both Lugano and El Salvador as we continue to work towards a more inclusive global economy.”
Even though El Salvador is faithful to its Bitcoin promise, the last couple of months has not been the best in its journey. As reported by CNBC, El Salvador currently has an unrealized paper loss of about $60 million which will not be locked in until its Bitcoin position is exited.
Furthermore, the country’s debt-to-GDP ratio, which determines the country’s debts to its revenue, is about to rise to 86.9% this year. This is raising concerns about the country’s debt sustainability over the medium term.
The fall of Bitcoin’s value over the past year is the biggest contributor to El Salvador’s problems.
Bitcoin up to $20,000
Following its all-time high of $67,500 in November 2021, Bitcoin’s price fell to $18,400 at its lowest. However, over the last few days, BTC’s price went up and is currently trading at $20,667. The king coin is setting its eyes at $22,600, its critical resistance, which can only be reclaimed as support if the bullishness persists.
The Relative Strength Index (RSI) currently highlights excessive buying pressure in the market. A cooldown could be initiated if the indicator crosses 70.0 before BTC reaches $22,600.
However, if BTC notes a fall from its current price, it will return to trade around its critical support level of $18,600.
Author
Aaryamann Shrivastava
FXStreet
Aaryamann Shrivastava is a Cryptocurrency journalist and market analyst with over 1,000 articles under his name. Graduated with an Honours in Journalism, he has been part of the crypto industry for more than a year now.
