Bitcoin (BTC) rate at a million in five years?
Samson Mow, chief strategy officer of blockchain technology provider Blockstream, believes El Salvador’s bitcoin-backed volcanic bonds will drive Bitcoin (BTC) to $ 1 million in five years.
Despite previous setbacks, Bitcoin (BTC) soared to an all-time high of nearly $ 69,000 that month before losing again. Altcoins like Ethereum, BNB from Binance, Solana, Cardano and XRP saw even bigger gains. The net effect has pushed the total capitalization of the crypto market to $ 3 trillion.
Mow is convinced of a good Bitcoin future after studying the Bitcoin plan of El Salvador. “If bitcoin hits $ 1 million at the five-year mark, which I believe it will, El Salvador will sell bitcoin in two quarters and win back $ 500 million,” Mow said in a conversation over the weekend, in which was about how the country could fund its Bitcoin bonds, as reported by Reuters.
El Salvador, volcanic bonds and the bitcoin
On October 27, there were 1,120 Bitcoin – over 63 million dollars at the current rate – in the treasury of El Salvador, according to official information. Now President Nayib Bukele plans to build a low-tax bitcoin city backed by a billion dollar bitcoin bond and powered by geothermal energy from the Conchagua volcano. Half of this amount will be used to build the city while the other half will be used to purchase more bitcoin.
“If you can get 100 more countries to issue these bonds, that’s half the market capitalization of Bitcoin (BTC) ,” Mow said. He added that on game theory, El Salvador has a first mover advantage in issuing bonds. In addition Mow notes that in ten such bonds five billion dollars put into Bitcoin for several years from the market would that El Salvador would make the financial center of the world.
These “volcanic bonds” will be US dollar denominated bonds with a term of ten years and an interest rate of 6.5%.
“Invest here and make as much money as you want,” said Bukele at the end of a week-long Bitcoin promotion in the country to the audience. He even compared the upcoming Bitcoin City to cities founded by Alexander the Great.
Conclusion
Nonetheless, traditional financial players view the Bukele plan as extremely dubious. Renowned investors, speaking to the Financial Times, said the deal could mean the country would have less access to traditional debt markets. Kevin Daly, a fund manager at Aberdeen Standard Investments, said;
“I don’t know who is going to buy these bonds, but we certainly won’t be.”
Meanwhile, the International Monetary Fund (IMF) has warned that El Salvador’s new legal tender could pose consumer and financial risks. The country is currently applying to the IMF for a $ 1.3 billion loan to build a new airport and railroad.
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