Salvadorian president Nayib Bukele is looking to benefit from Bitcoin’s falling value. He announced Monday the country had purchased another 500 bitcoin, bringing the total investment to 2,301 bitcoin, or about $71.7 million at current prices. With one bitcoin worth around $31,000, the latest purchase represents a $15.5 million investment.
The price of the world’s most well-known cryptocurrency has plunged in recent days, briefly falling below $30,000 Monday evening and again Wednesday morning.
Bukele announced last September El Salavador would become the first country in the world to accept the cryptocurrency as legal tender. In October, the government purchased nearly $25 million of Bitcoin, and in an effort to encourage adoption of bitcoin, El Salvador launched crypto wallet software called Chivo and offered Salvadorans $30 to download it. But due to factors including the uncertainty of the war in Ukraine, rising inflation and the US Federal Reserve’s decision to raise interest rates, the price of the most popular cryptocurrency in the world has plummeted more than 50% from its all-time highs.
Bloomberg calculates that El Salvador has accumulated a total of 2,301 bitcoins since it started buying them last September. Most were bought at prices above $45,000, so the nation of 6 million people has lost tens of millions of dollars speculating on bitcoin, according to Ars Technica.
In the process, Salvadorian bonds have fallen over 40% of their original value.
Bukele and his government are now attempting to recoup some of the losses by “buying the dip” Bitcoin has seen in recent weeks. The all-time high of over $66,000 in October 2021 had speculators wondering where it could ultimately reach, and Bukele shared the enthusiasm, purchasing $25 million worth of the digital currency the same month.
The following month, Fitch Ratings, an American credit rating agency, warned in a report: “Widespread adoption of bitcoin has been limited by its inherent price volatility, the domestic banking sector’s low financial inclusion and the lack of broad internet availability.
El Salvador ultimately felt the brunt of Fritch and other credit agencies February, as the country was downgraded to a rating of CCC, described as “junk” in the industry. The consequence of the downgrade is El Salvador cannot access global markets to issue more debt.
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