More Stress For El Salvador As Bitcoin Dips To $29,000


El Salvador has been on the radar of leading financial and economic institutions since it made Bitcoin legal tender. It has basically become a fascinating spectacle as cryptocurrency proponents and non-supporters alike are watching to see how this can happen. El Salvador, which kept its promise of bitcoin, made multiple BTC purchases near the peak of the market last year and some this year.

The country now owns at least 2,300 BTC since it made its first purchase in September 2021. Now that the price of Bitcoin has dropped dramatically since the country started buying, how is this being implemented in the North American country?

El Salvador and Bitcoin

I had El Salvador Bought another 500 BTC in May After the market fell to 1.68 trillion dollars. These coins, which were bought at an average price of $30,774, have brought the country’s holdings to 2,301 BTC so far. This would be the lowest price the country was able to purchase the digital asset, and given that this purchase was only a small portion of its larger holdings, the country is still at a loss from its multiple purchases.

Related reading | Funding Rates Drop to Annual Low After Bitcoin Drops Below $29,000

The first time El Salvador bought some bitcoin in September, it was trading above $44,000. What this means is that digital assets have fallen by about 45% since then. Its entire inventory is now worth about $70 million at current prices. So even with the dollar-cost averaging method that saw the country buy BTC at different rates, it’s still down to 28% of the total purchase value.

Bitcoin price chart from TradingView.com

BTC falls to $28,000 | Source: BTCUSD on TradingView.com

The move to accept BTC not only proved controversial in terms of the price of bitcoin, but also affected the country’s ability to receive international aid in the form of loans.

Last year, it was announced that the country was looking to receive $1.3 billion from the International Monetary Fund. However, this does not appear likely to happen given that the International Monetary Fund has expressed its disdain for the adoption of bitcoin as legal tender.

She advised the country to remove the digital asset as an official national currency, noting that this may cause problems for the economy in the long run, revealing an estimate of the current account deficit for El Salvador transfers and an economy dependent on external financing. to drift about $2 billion for the next three years. But President Neb Bukele is deaf to this.

Related reading | Crypto Carnage Causes Escape to Bitcoin Safe Haven, Hegemony Explains

El Salvador is a country that relies heavily on remittances from citizens abroad who send money to loved ones back home. For this reason, the president said that BTC will greatly help in making these transfers easier and cheaper for its residents.

On the price side, the president wasn’t too bothered by the recent dip either. He said in the past that You expect the price of the digital asset to reach $100,000 sometime in 2022. If this happens, the country will make a huge profit from its BTC holdings.

Featured image from Coingape, chart from TradingView.com

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