The past few days have been a wild rollercoaster, and crypto volatility has yet to subside. Recent market events have convinced you that anyone who trusts cryptocurrency is crazy. However, El Salvador has reaffirmed its faith in Bitcoin. This has caused both relief and confusion for investors.
El Salvador’s president, Nayib Bukele, has defied major intergovernmental institutions such as the IMF by sticking with cryptocurrency. El Salvador currently holds 2,381 BTC worth a total of $103 million. However, during the cryptocurrency winter, the value of his BTC holdings plummeted to $39.4 million.
El Salvador’s BTC investments rocked amid FTX drop
FTX devastating news spread fast and furious across El Salvador. There were rumors that El Salvador was hit by the failed FTX crypto exchange. Following this, crypto enthusiasts wondered if the reported problem would spread to other sectors.
Salvadoran President Nayib Bukele, known as the “Bitcoin President”, claims he never had anything to do with the FTX cryptocurrency. In addition, Bukele thanked God for protecting him and the small Latin American nation from danger.
Binance CEO Changpeng Zhao (CZ) then appeared to update the crypto community on the rumours. CZ took to Twitter to dispel these reports, stating that “the amount of misinformation is insane.”
He added that he “exchanged messages with President Nayib a few minutes ago”. According to him, President Bukele told him, “We do not have any Bitcoins in FTX and we have had nothing to do with them. Thank God!”
Mike Novogratz, who spread false information in a now-deleted CNBC interview, took to Twitter to apologize to President Bukele and the people of El Salvador: “I fell for ‘fake news’ and while I mentioned it I didn’t confirm it, I should have.” Novogratz thanked Binance’s CZ for “pointing it out.”
Nayib Bukele remains a supporter of cryptocurrency
Now that this issue has been resolved, El Salvador’s crypto bets are back on schedule. El Salvador, The first country in the world to accept Bitcoin as legal tender in September 2021 is resuming BTC purchases after a months-long hiatus caused by unfavorable market conditions.
President Nayib Bukele confirmed on November 16 that the Central American government will begin daily BTC purchases on November 17. The statement comes three months after the country’s last BTC purchase, which took place in June 2022.
|Date of purchase||Bitcoins||Cost per BTC||Total amount invested|
|September 6, 2021||400||$46,811||$18,724,400|
|September 7, 2021||150||$46,091||$6,913,650|
|September 19, 2021||150||$42,843||6,426, $450|
|October 27, 2021||420||60,622 dollars||$25,461,240|
|November 26, 2021||100||$54,815||$5,481,500|
|December 3, 2021||150||$48,670||$7,300,500|
|December 21, 2021||21||$49,220||$1,033,620|
|January 21, 2022||410||$36,585||$15,000,000|
|May 9, 2022||500||$30,744||$15,372,000|
|June 30, 2022||80||$19,000||$1,520,000|
The introduction of a new BTC buying protocol comes as no surprise at a time when the leading cryptocurrency is trading at low turnover. Due to the prolonged crypto winter, BTC adoption in El Salvador does not look very promising at the moment.
Nevertheless, based on the historical Bitcoin price cycle, the country could easily recoup its losses in the next bull period simply by relying on BTC purchases. Justin Sun, the founder of the crypto network Tron and Grenada’s ambassador, took a similar initiative shortly after Bukele’s announcement, mimicking Bukele’s fundraising method.
The strategy of buying any asset (in this case BTC) on a predetermined schedule in response to price fluctuations is known as dollar cost averaging (DCA). The advantage of DCA is that it removes the emotional component of decision making and in the long run you pay less in dollars for the investment than if you tried to time the market.
The future of El Salvador under the BTC regime
Here’s a hypothetical. According to CoinMarketCap, the price of BTC is $16,572. El Salvador has 2381 BTC and its holdings are (2381* $16,572 = $39,457,932). From November 17 to December 31, El Salvador will add 45 BTC to its portfolio. Total will be 2426 BTC.
According to statistics, in 2027 El Salvador’s debt is expected to reach 38.52 billion dollars. The country’s GDP currently stands at $28.74 billion, which is terrible news for Salvadorans. But with BTC trading out of the hands of governments, the country can boost its economy to pay off its debt. The bull run will be a breath of fresh air for investors, but it will be salvation for the people of El Salvador.