El Salvador Snaps Up Another $1.5M in Bitcoin, but Sits Heavily in the Red

El Salvador has bought the bitcoin dip yet again, piling into the cryptoasset as a market meltdown has led to steep drops in its price.

President Nayib Bukele said on Friday that the country bought 80 bitcoin at $19,000, worth around $1.5 million. “Thank you for selling cheap,” he wrote in a tweet, which included screenshots of the purchase transactions.

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The country’s last bitcoin purchase was in May when it bought 500 bitcoin at an average price of $30,744 each, bringing its total holdings to 2,301 bitcoins, worth roughly $71.4 million at the time. With its latest purchase and tumbling prices, El Salvador now holds 2,381 bitcoin worth $46.4 million, according to Twitter updates from Bukele.

El Salvador’s president is once again trying to “buy the dip,” this time as bearish market sentiment from hawkish central banks and a series of major cryptocurrency firm blow ups have prices trading near the 2017 all-time high level.

Bukele has said he trades his country’s bitcoin on his mobile phone. His first purchases were in September 2021, when bitcoin was trading at around $52,000, according to the Nayib Bukele Portfolio Tracker website, and he hasn’t shown a particular penchant for market timing. His second-largest purchase in bitcoin terms was 420 BTC on October 27, 2021, when bitcoin was trading at $60,345.

Because of market turbulence, El Salvador has continued to delay its highly-anticipated “volcano bonds” — which were slated to be issued by March 20. This planned $1 billion bond offering is meant to fund the country’s “bitcoin city,” a community at the base of the Conchagua volcano. 

Yet, some industry commentators believe the bottom might be near. JPMorgan analysts said in a note Wednesday the deleveraging that triggered the recent crypto rout may not last much longer and pointed to strong venture capital funding in the industry as a positive sign.

Chris Terry, board member and vice president at lending platform SmartFi, told Blockworks he sees a “weak bottom” in bitcoin. “We may be forming a bottom in the $20K range,” he said.

“If bitcoin would have gone into the low teens, $12-14K, I would feel better about it. That would be a bottom I could believe in.”

Les Borsai, co-founder at Wave Financial, echoed that sentiment. “Most of the would-be sellers have already sold, and so at this point, you’re going to be left with long-term holders and lots of interested buyers,” he said.

El Salvador’s president has signaled that he wants the nation to hold onto its bitcoin purchases. Finance Minister Alejandro Zelaya brushed off concerns last month that bitcoin’s plunge in value would affect the country’s fiscal health, saying the risk is “extremely minimal.”

In total, the nation’s BTC portfolio is down about $60 million, or -57%.

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