El Salvador begins buying Bitcoin

El Salvador begins buying Bitcoin

The President of El Salvador, Nayib Bukele has just tweeted that the country will buy one Bitcoin per day starting tomorrow, Friday. The President came up with the idea as a panacea to the current bear market and the losses El Salvador has incurred as a result.

Crypto winter

El Salvador is the first country to adopt Bitcoin as its legal tender back in September 2021. The county went on an accumulation spree since then and stored a large number. It is reported that El Salvador currently has up to 2,381 BTC in its possession with a current value of $103 million at some point.

But in the wake of the ongoing bear market, El Salvador’s Bitcoin holdings’ value has dropped to $39.4 million. But President Bukele announced on the 17th of November that starting from the 18th, El Salvador will buy one Bitcoin daily. The latest announcement has come almost three months since the Latin American country bought its last set of Bitcoin in July this year.

El Salvador began to acquire Bitcoin in large numbers in September last year just immediately after announcing it as a legal tender. As of then, Bitcoin was right in the middle of a bull run and every Bitcoin purchase by the country was considered lucrative. This was because the asset’s price kept getting to new heights almost every other week.

A bright future

But things turned sharply around, especially since the second quarter of this year. As the bear market fully set in, the heavy losses made it appear like the country’s investment was a bad gamble.

Some public records maintain that El Salvador presently has 2,381 Bitcoin in its possession at $43,357 each. Therefore, the government spent close to $103 million on Bitcoin which is now worth about $39.4 million. 

According to the announcement, buying new Bitcoin every day, when the asset is moving around a new low might help El Salvador fix some of its losses over time. Away from the losses, adopting Bitcoin has significantly boosted El Salvador’s tourism sector. It also reduced its cross-border remittances.

On the ground, the report says Bitcoin is accepted by most tourism locations but applications for mobile payment need to be fine-tuned. The country’s Bitcoin adoption might not be visibly promising right now as a result of the crypto winter. But the country might be able to offset when the next bull run comes as long as it holds its current purchases. 

Ifeanyi Egede

Ifeanyi Egede is an experienced and versatile writer and researcher. He has keen interest in blockchain technology, cryptocurrencies, NFTs, Web3, metaverse, fintech and emerging technologies. He has tons of published works both online and in the print media. He has close to a decade of writing experience. When he is not writing, he spends time with his lovely wife and kids.

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