Bitcoin price has dropped below $30,000 this week. Because of this drop, El Salvador saw the opportunity to buy in the drop. The president of the country has no paper hands and, in addition to this purchase, shows the new Bitcoin City plan – a city, at the foot of a volcano, totally dedicated to bitcoin. El Salvador, the South American country known as Bitcoin’s first nation, recently claimed that it has taken advantage of this decline in Bitcoin’s price. More specifically, it announced that it had acquired 500 BTC at an average price of $30,744 per coin, with a total value of approximately $15.4 million. This brings the country’s total purchase to around 2,000 bitcoins.
El Salvador bets on DCA
The entire cryptocurrency market turned red this week, with all tokens dropping more than 10%. The market continues to decline following the Federal Reserve’s policy announcement last week. In addition, Bitcoin was approved as legal tender in the Latin American country, a decision advised against by the International Monetary Fund (IMF) and other international organizations. Efforts to curb rising inflation in El Salvador began in September 2021 with the adoption of BTC as legal money. When the currency became legal money the country acquired a significant part of the most valuable cryptocurrency asset. When it comes to acquiring Bitcoin, El Salvador takes a “buy on the dip” approach. When the price of Bitcoin drops, the President declares that additional Bitcoin will be added to the country’s reserve currency fund. As El Salvador has adopted BTC as its legal tender, it is the cheapest purchase in the country to date. Bukele believes that “some guys are selling it too cheap,” supporting his long-term goal of broad Bitcoin adoption in light of the current market sell-off.
El Salvador is fully committed to Bitcoin
The country’s decision to adopt BTC as its official currency is not the only move the country has made to boost the country’s economy. President Bukele has previously indicated 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 long-awaited Bitcoin Volcanic bonds. The money generated by the bonds would be used to build the world’s first Bitcoin city. However, the release date of the titles has already been delayed several times.
El Salvador does not accept Bitcoin (yet)
It is also unfortunate for the president that residents of El Salvador do not like switching to Bitcoin and using the Chivo wallet. A few weeks ago, the news broke that 60% of the country’s residents abandoned their Chivo wallet after receiving the free $30 upon signing up. Furthermore, businesses operating in El Salvador are not rushing to accept Bitcoin, with only 20% of all businesses offering Bitcoin payments right now. Allegedly, there are even companies that once accepted BTC, who have now stopped doing so and gone back to basics. Even when it comes to taxes, there is still no storm. Only 5% of all El Salvador residents chose to pay their taxes using the Chivo wallet. The low adoption rate is likely related to the volatile nature of Bitcoin, along with the technical complexity of using the Chivo wallet. Elderly people in particular have a hard time using it.
The president posted some pictures of Bitcoin City on Instagram. This will be a city built on the side of a volcano. The purpose of this is to run it entirely in bitcoin and get the energy primarily from the volcano. Before showing you these images, let’s take a look at the plans shared on November 21st. In it, we see the shape of the city and the facilities that Bitcoin City will contain. Bukele estimated that the entire project would cost around 300,000 bitcoins. At the rate of bitcoin – a few days after the previous all-time high – this was 15.3 billion euros, roughly speaking. At the moment, that price is around 9 billion euros. That is, despite the drop in price, still a high quantity. To finance this, bitcoin bonds will be issued, the proceeds of which will be earmarked for this project. Half of this is used for mining infrastructure and the other half is used to buy and store bitcoin. For those interested; these titles are expected in September.
How are the plans?
In the photo that Bukele shared, we see a mockup of the city. It’s kind of a circle with a big bitcoin square in the middle. Despite the bitcoin price drop, he is happy to share this. “Bitcoin City looks beautiful. And the airport too,” the president said on his Instagram page. Therefore, 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 constructions that will cover the city.
President Bukele showing off on Twitter
So, El Salvador recently replenished its Bitcoin reserves by buying 500 BTC for a price around $30,000. This purchase has already allowed the country to make a profit, and the country’s president did not hesitate to display it on his Twitter account. According to the Twitter post, the country’s balance jumped to $1 million in just 11 hours, right after the Bitcoins were purchased. As President Bukele brags about the successful deal, Twitter users reported that the country lost $20 million due to the average purchase price of around $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.” As the average purchase price of Bitcoin is high, El Salvador only entered the green numbers when the price of the largest cryptocurrency increased by around 40%. In September, the country started buying Bitcoin when BTC was trading for around $50,000.