El Salvador buys the dip after the crypto crash

Bitcoin’s price fell below $30,000 this week. Because of this drop, El Salvador saw the opportunity to buy the drop. The president of the country has no paper hands and alongside this purchase shows the new plan of Bitcoin City – a city, at the foot of a volcano, entirely dedicated to bitcoin.

El Salvador, the South American country known as the first Bitcoin nation, recently said it benefited from this decline in Bitcoin price. In particular, he announced that he acquired 500 BTC at an average price of $30,744 per coin, for a total value of approximately $15.4 million. This brings the country’s total purchase to about 2,000 bitcoins.

El Salvador chooses DCA

The entire cryptocurrency market saw red this week, with all tokens falling more than 10%. The market continues to decline following the Federal Reserve’s policy announcement last week. In addition, Bitcoin has been approved as legal tender in the Latin American country, a move that the International Monetary Fund (IMF) and other international organizations have advised against.

Efforts to stem the tide of rising inflation in El Salvador began in September 2021 with the adoption of BTC as legal tender. When the king’s coin became legal tender in the country, it acquired a significant portion of the most valuable cryptocurrency assets. When it comes to acquiring Bitcoin, El Salvador takes a “buy the dip” approach. When the price of bitcoin falls, the president declares that additional bitcoin will be added to the country’s reserve currency fund.

Since El Salvador adopted BTC as legal tender, it has been the cheapest purchase in the country so far. Bukele thinks that “some guys are selling really cheaply”, supporting his long-term goal of widespread Bitcoin adoption in light of the current market sell-off.

El Salvador is fully committed to Bitcoin

The country’s decision to use BTC as its official currency is not the only decision the country has taken to boost the country’s economy. President Bukele has previously stated that his goal is to make El Salvador the most Bitcoin-friendly nation.

It was also recently announced that the country is preparing to launch its highly anticipated Bitcoin Volcanic Bonds. The money generated from the bonds would be used to build the world’s first Bitcoin city. However, the bond’s release date has been postponed several times.

El Salvador does not (yet) accept Bitcoin

It is also unfortunate for the president that the people of El Salvador do not like to switch to Bitcoin and use the Chivo wallet. A few weeks ago, news broke that 60% of the country’s residents had given up on the Chivo wallet after receiving the free $30 when they signed up.

In addition, companies operating in El Salvador are in no rush to accept Bitcoin, with only 20% of all companies currently offering Bitcoin payments. Apparently there are even companies that once accepted BTC that have now stopped doing so and gone back to basics.

Even when it comes to taxes, there is no storm yet. Only 5% of all residents of El Salvador have chosen to pay their taxes with the Chivo wallet.

The low adoption rate is most likely related to Bitcoin’s volatile nature, coupled with the technical complexity of using the Chivo Wallet. Especially older people find it difficult to use.

Bitcoin City

The president posted some photos of Bitcoin City on Instagram. It will be a city built right next to a volcano. The goal is to run it entirely on bitcoin and get most of the energy from the volcano.

Before we show these images, let’s take a look at the plans shared on November 21. In this we see the shape of the city and the facilities that Bitcoin City will contain.

Bukele estimated that the entire project would cost about 300,000 bitcoins. At the price of bitcoin back then – a few days after its previous all-time high – it was a whopping 15.3 billion. Currently, this price is around 9 billion euros.

Despite the lower price, this is still a high amount. To finance this, bitcoin bonds are issued, the proceeds of which go to this project. Half of this amount is used for mining infrastructure and the other half to buy and store bitcoins. For those interested; these bonds are expected in September.

What do the plans look like?

In the photo that Bukele shared, we see a model of the city. It’s kind of like a circle with a big bitcoin square in the middle. Despite the price decline of bitcoin, he is happy to share this. “Bitcoin City is beautiful. And the airport too,” the president posted on his Instagram page.

So it is also possible to fly to Bitcoin City. The official end date has not yet been announced. In the images of the message, we see, among other things, a kind of stadium and other buildings that will cover the city.

President Bukele shows off on Twitter

For example, El Salvador recently replenished its Bitcoin reserves by purchasing 500 BTC at a price of around $30,000. With this purchase, the country has already made a profit and the president of the country did not hesitate to post it on his Twitter account.

According to the Twitter post, the country’s balance rose to $1 million in just 11 hours, right after the Bitcoins were bought. While President Bukele brags about the deal’s success, Twitter users reported that the country lost $20 million over an average purchase price of about $45,000. Bukele said on Twitter:

“I could sell these coins right now and make almost a million dollars in just 11 hours, but of course not.”

Because the average purchase price of Bitcoin is high, El Salvador only enters the green numbers when the price of the largest cryptocurrency has risen by about 40%. In September, the country started buying Bitcoin when BTC traded for about $50,000.

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