El Salvador Buys the Bitcoin Dip, Adding 420 More BTC

28 October 2021, 08:30 GMT+0000
Updated by Kyle Baird
28 October 2021, 08:30 GMT+0000
In Brief
  • El Salvador has purchased 420 more bitcoins.
  • It has also cashed out some of its purchases through a trust fund that is funded by both BTC and USD.
  • El Salvador’s bitcoin adoption has been growing at an appreciable rate, with more users on the Chivo wallet and more bitcoin ATMs launching.
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El Salvador President Nayib Bukele says that the government has already made a profit from the bitcoin it has purchased. He said that the long wait was worth it, but the country had bought the dip and purchased 420 more bitcoins.

El Salvador’s President Nayib Bukele, tweeting on Oct 28, said that the government had “bought the dip” in what was a long but worthwhile wait. He announced that the country had purchased 420 more BTC and that they were already making a profit on the bitcoin purchased. El Salvador also purchased 150 BTC when bitcoin’s price was tanking around mid-September 2021.

He further revealed that the government has a trust fund represented by US Dollars, but which was funded by both USD and BTC. As such, any positive changes in bitcoin’s price have led to a profit, with the country cashing out by withdrawing some dollars in the trust.

Bitcoin’s price was at over $59,000 when Bukele made the tweet, finding itself at a new all-time high in recent weeks that has since settled a little. El Salvador purchased 200 bitcoin right before the release of its bitcoin wallet Chivo, which would certainly have resulted in a profit now. At the time of that purchase, bitcoin was priced at approximately $51,000.

The news was greeted warmly by the crypto community, who hold El Salvador’s decision to make bitcoin legal tender as a watershed moment for the asset. Regulators and financial institutions are far more reserved in their opinion, and some are outright critical. Morgan Creek partner Anthony Pompliano also chimed in with the opinion that the U.S. must match every single BTC purchase of other countries, calling it absurd that El Salvador holds more bitcoin.

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El Salvador’s actions are the first of their kind for a government, and global bodies like the International Monetary Fund (IMF) and the Financial Action Task Force (FATF) have concerns. Even relevant figures within the country have expressed disapproval — including citizens who have protested against the law.

Will El Salvador’s bitcoin decision meet high ambitions?

There’s no question that the decision to adopt bitcoin has had a great impact on the local economy. But some doubts remain as to how effective the decision will be in boosting economic strength.

On the positive side, Bukele claims that the government has already turned a profit and says that national demand for BTC has outweighed USD. He has also stated that bitcoin usage is exceeding expectations. The latest reports reveal that there are over two million El Salvadorians using the Chivo wallet, with over 200 bitcoin ATMs in operation.

Bukele has highlighted remittances as being one key area where bitcoin transactions can help reduce costs. But as with any new technology and economic reform, there will be challenges. Still, other countries are keeping a close eye on the development, while Cardano founder Charles Hoskinson says it will compel other countries to legitimately consider cryptocurrencies.

Disclaimer

BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.