Topline
El Salvador, the first country to adopt bitcoin as legal tender, purchased 410 bitcoin for $15 million Friday with the currency trading at its lowest point in six months, President Nayib Bukele announced on Twitter.
Salvadoran President Nayib Bukele speaks during the inauguration of the ISA World Surfing Games 2021 … [+] on May 29, 2021 in La Libertad, El Salvador.
Rolan Barrientos/APHOTOGRAFIA/Getty Images
Key Facts
Bukele, who also bought bitcoin during a dip in September, announced in an emoji-laden tweet Friday that the country had purchased the currency “really cheap.”
Friday’s purchase brings El Salvador’s total holdings to at least 1,801 bitcoin, currently valued at about $66 million, Bloomberg reported.
The value of bitcoin continued to decline following Bukele’s announcement, reaching a low of $35,422 before rebounding slightly to $36,653.56 Friday evening, down 46.72% from its high of $68,789.63 in November.
Key Background
In September, El Salvador became the first country to adopt bitcoin as legal tender, establishing bitcoin ATMs and requiring businesses to accept the cryptocurrency. Bukele later pledged to build a tax-free Bitcoin City on the Salvadoran coast, to fast-track citizenship for certain blockchain investors and to establish geothermal bitcoin mining facilities that could make the Central American country a global crypto mining hotspot. The U.S. dollar is El Salvador’s other official currency.
Crucial Quote
If adopting bitcoin as currency changes El Salvador’s economy for the better, “it’s game over for FIAT,” tweeted Bukele, who describes himself as “CEO of El Salvador” in his Twitter bio.
Contra
Though it made Bukele a hero in the crypto community, El Salvador’s adoption of bitcoin as legal tender provoked widespread protests by Salvadorans who complained that the decision made things harder on regular people while benefiting big investors. In September, anti-bitcoin protesters hoisted signs and burned tires in front of the Supreme Court building in San Salvador until they were dispersed by heavily armed police, Al Jazeera reported. Meanwhile, El Salvador’s national debt has ballooned to over 50% of its GDP. In July, Moody’s downgraded the nation’s credit rating to Caa1, signifying very high credit risk. El Salvador’s bitcoin trades add to the nation’s credit risk, Moody’s said. El Salvador is seeking a $1.3 billion loan from the International Monetary Fund, which had warned against adopting bitcoin as a national currency.
Further Reading
“El Salvador President Says Bitcoin ‘Really Cheap’ Amid Dip” (Bloomberg)
“Stable Coins Benefit As Bitcoin Falls Below $40,000” (Forbes)
