Despite the ongoing bearish market in the crypto world, El Salvador has once again bought the Bitcoin dip with an addition of 80 BTC.
The president, Nayib Bukele announced this via his Twitter handle where he stated “El Salvador bought today 80 BTC at $19,000 each. Bitcoin is the future. Thank you for selling cheap”.
This brings the total amount invested in Bitcoin to $1.52 million. Recall that this is not the first time that El Salvador is buying the dip, as it earlier bought the Bitcoin dip in May, adding 500 Bitcoin for a total of $15.3 million, $30,744 each to the government coffers.
After El Salvador’s adoption of Bitcoin as its legal tender, the economic growth has plummeted with its deficit remaining high. The country’s debt-to-Gdp ratio is set to hit close to 87% this year, raising concerns that the country isn’t well equipped to settle its billion-dollar loan obligations.
The Bitcoin adoption has not favored them in any way, as the country needs a lot of cash to settle its debts of more than $ 1 billion. Since the time Nayib Bukele announced his plan to adopt Bitcoin, the price has fallen more than 70% from the time of adoption.
The country has an unrealized paper loss on Bitcoin of around $50 million, which according to the country’s finance minister, is less than 0.5% of the national budget.
El Salvador is still struggling with distressed debt, as the country is seeking a $1.3 billion loan from the International Monetary Fund (IMF). The country has in the past received loans from the IMF, but currently, IMF has expressed concerns over El Salvador’s growing exposure to Bitcoin’s volatility and urged greater transparency.
International money lenders have also stalled negotiations with El Salvador because they are unwilling to lend money to a nation that is lavishing millions of taxpayers’ money on Bitcoin whose price is prone to extreme volatility.
With the adoption of Bitcoin, it has become even more difficult for El Salvador to borrow money. It is obvious that the government of the country has adopted a “buy the dip” strategy, because they always purchase Bitcoin any time there is a fall in the price. This country is teaching us and answering the question: what is Bitcoin? For it, it is an investment asset class.
Ever since the adoption of Bitcoin in the country, businesses have disclosed that they reverted to accepting cash as they were losing money because of the way the cryptocurrency loses its value.
It’s obvious that President Nayib Bukele’s adoption of Bitcoin is for a selfish purpose, because there are major constraints that have ravaged the country due to its adoption, but he seems unconcerned.
Critics disclosed that the country’s Bitcoin transition leaves behind those who don’t have a smartphone, which is mainly older Salvadorans, and those without internet access. Yet, we cannot count out a nation which baptized Bitcoin when it made it a legal tender.
The government of El Salvador has economically baptized Bitcoin, making it a legal tender in the nation. That brought some cheers to the world of coins because hedge funds, investors and market makers can safely domicile their “wallets” in El Salvador knowing that if anything bad happens in other places, they can recover by exchanging for El Salvador currency.