Unlike in previous crashes, the president of El Savlador, Nayib Bukele, who made bitcoin legal tender a year ago, did not exhort his followers to “buy the dip”. The laser eyes, popular among crypto currency traders, have long since been removed from his Twitter profile.

On the day that FTX declared insolvency, he announced that the country would sign a free trade agreement with China. His vice-president, Félix Ulloa, said that China had offered to buy the country’s $21bn in foreign debt as part of the deal.

The Central American country of 6.5 million finds itself in a tough financial position. In January it must pay €667m ($688m)for a Eurobond amortization. At the beginning of the year Bukele promised that his country would issue bitcoin-denominated bonds to pay off national debt and forecast that the price of bitcoin would reach $100,000.

But the so-called “volcano bonds” never emerged and today the bitcoin price hovers around $16,000. The best tracker of the president’s opaque trading estimate that he has spent over $107m on 2,381 bitcoin. Today that investment is worth a little over $40m.

“If Bukele dreamed that he could create a different and innovative political economy, against the advice of the IMF, that dream has failed,” said Luis Membraño, a Salvadoran economist. “There are no easy alternatives, no short-cuts.”

The bitcoin losses are relatively insignificant to the overall debt, but the president’s determination to mock advice from the IMF to backtrack on his bitcoin policy has spooked international markets. When the ratings agency Moody’s announced a January downgrade in the country’s credit, Bukele tweeted: “Breaking: El Salvador DGAF”, an acronym of “don’t give a fuck”. Now Fitch says that some form of default is likely in January.

With inflation rising, a recession looming and the fiscal situation worsening, El Salvador cannot turn on the printing press because the country adopted the US dollar as national currency in 2001. Instead the government has dipped into its reserves to cover its fiscal hole. If the situation deteriorates, the country could eventually be forced to move off the dollar, according to Membreño.

However, to accept debt financing from China would signify a definitive break from the US and move the country closer China, Russia and Turkey, according to Membreño. “It would represent a total realignment of El Salvadoran foreign policy,” he said.

That financing wouldn’t come cheap, according to Evan Ellis, a senior associate at the Washington DC based Centre for Strategic & International Studies. “China acts as a payday lender, they make good money off of these deals,” he said. “But they often find a way to tie the loans to long-term commercial and strategic benefits opening the way for Chinese companies.”

Since El Salvador ended its relationship with Taiwan in 2018, China has agreed to build a stadium and a library in the country but its plans to convert the port of La Unión into a logistics hub have stalled.

Closer ties to China could also suit Bukele’s own ambition. He has attracted criticism from the US and Europe for seeking re-election in 2024 in contravention of the country’s constitution.

“When populist governments, of the left or right, come to power, China acts as a non-judgmental underwriter,” said Ellis. “China can give Bukele financial independence to be authoritarian and ride roughshod over the constitution.”

With an approval rating around 90%, Bukele remains the most popular president in Latin America, based on a heavy-handed approach to law and order and regular attacks on the old political elite.

When Salvadorans elected him in 2019, following decades of corruption from the traditional parties and spiraling gang crime, many felt they were in the last-chance saloon.

But as a bitcoin gambler, Bukele has known neither when to hold them nor when to fold them. Closer ties to China would represent yet another roll of the dice.