After a strong week, the price of Bitcoin tumbled back to $45,000 while El Salvador acted quickly to purchase the dip.
Despite widespread warnings about its embrace of Bitcoin (BTC), El Salvador’s government continues to seize fresh market possibilities.
The Central American government has “bought the dip,” as Bitcoin price fell below $46,000 on Monday morning, Salvadoran President Nayib Bukele announced the purchase on Twitter. With 150 new coins, the Central American government now owns 700 BTC worth about $32 million at current prices.
We just bought the dip.
150 new coins!
El Salvador now holds 700 coins.#Bitcoin🇸🇻
— Nayib Bukele 🇸🇻 (@nayibbukele) September 20, 2021
“They can never beat you if you buy the dips,” Bukele exclaimed, in a clear reference to the “not financial advice” disclaimers common throughout the crypto world.
On the day Bitcoin became legal tender in El Salvador, the cryptocurrency had a flash crash to less than $43,000.
With the prospect of a Bitcoin tax exemption, El Salvador’s movement toward adoption got the crypto community buzzing. However, the country’s choice to make Bitcoin a legal currency is not without its challenges.
El Salvador Credit Scores are Dropping
In addition to protests and marches against the government’s Bitcoin decision, credit rating firm Standard & Poor’s (S&P) predicted that the adoption would have “immediate negative consequences” for El Salvador’s credit rating. S&P also said that El Salvador’s chances of obtaining a $1-billion loan agreement from the International Monetary Fund would be “significantly delayed.”
Speaking to CoinDesk, S&P representative Gerardo Aldana said the ratings company’s initial downgrading of El Salvador was based on the “negative impact” that cryptocurrencies would have on foreign reserves.
As this source notes, “The key reason behind the downgrade is related to a change in our expectations regarding international reserves in 2019. Specifically, the decline of international reserves during the third quarter due to an acceleration in foreign currency purchases to pay public external debt service could cause delays that will extend for several years.”
Now that El Salvador has used its own BTC stash to buy itself out of this predicament, it could begin talks with the IMF afresh.
With the country’s economy on a solid footing and foreign reserves having recouped their losses, El Salvador is now in a position to increase borrowing.
In any case, as far as BTC price goes – now that El Salvador has been able to prop it back up with its own crypto stash, we expect all markets will follow suit as demand continues to consume the majority of available supply as we enter the final quarter of 2018.
The Big Daddy, Mr. 180 Max Keiser said it best: “Buy Bitcoin – save yourself”
On Sept. 7, El Salvador became the first nation to recognize Bitcoin as legal currency, making history. Then there were 400 BTC in the government’s hands. By taking advantage of two price dips in two weeks, and buying 150 bitcoins each time, and selling 150 coins at a profit of 50%, El Salvador amassed 700 BTC in Bitcoin.
El Salvador’s small Central American country with 6.4 million people has become the world leader in adopting Bitcoin (BTC). That development accelerated when the nation legalized BTC and then began using it in everyday life.
The government is buying Bitcoins via two ATMs that have been installed at the country’s international airport, writes Bloomberg: “The first machine to trade BTC for fiat currency was unveiled last week and already has a waiting list of more than 1,500 people hoping to use it.”
The ATMs are not just for show
Last year, El Salvador’s GDP growth accelerated from an average of 3% to 4.5%. This year it is expected that the country will reach a growth rate of 5%.
El Salvador now has the highest BTC penetration per capita in the world, as well as a growing number of merchants accepting BTC as payment. As of today, there are more than 100 merchants accepting Bitcoin in El Salvador: restaurants and hostels, auto repair shops and dentists’ offices, real estate agents, and graphic designers.
In fact, the number of crypto ATMs in El Salvador is increasing at a rapid pace. The country is now home to the third-biggest network of crypto ATMs after the United States and Canada, making up 70% of all crypto ATMs in South America.
El Salvador now has more crypto ATMs than the United Kingdom, according to data from Coin ATM Radar. To enable local Bitcoin transactions and conversions from Bitcoin (BTC) to US dollars, the American government has deployed 205 crypto ATMs so far.
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