El Salvador once again boosted its bet on Bitcoin with another purchase. The sovereign country made history as the first to officially introduce Bitcoin as legal tender in September. To celebrate the historic moment, President Nike Bukele announced that the country has bought 200 bitcoins. After promising to buy more, it was bought out and the state kept that promise.
The state bought an additional 250 bitcoins after that. The third purchase in September brought El Salvador’s total holdings to 700 coins. At each of these stages, President Najib Bukele referred to the purchases as “buying dives”. This has proven to be the case as the country of El Salvador is currently making profits from its BTC holdings.
El Salvador buys 420 Bitcoin
Since the bitcoin price reached a new peak in October, the value of the asset has been on a downtrend. A number of small dips saw the price drop below $60,000 again. El Salvador took this as an opportunity to increase its BTC holdings while the broader market is more conservative. In line with previous sentiment, the president tweeted that the country had “bought the dip again.”
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A follow-up tweet from the president after hours confirmed that the country is now making profits from the recently purchased bitcoins. This is because the buy was made when the price was still moving around $58,000, and by the time the follow-up tweet was posted, BTC price had once again surged above $60K.
It is still unknown if betting in BTC will pay off in the long run. However, in the short term, El Salvador is seeing significant gains from its investments in digital assets. The first batch of BTC was bought at $52,000, and since then the asset has reached a new all-time high of $67,000.
BTC price trending at $61K | Source: BTCUSD on TradingView.com
How does earning El Salvador Bitcoin work?
President Najib Bukele took some time to clear up some queries about his investments in BTC. He noted that the country operates with the perspective of 1 BTC = 1 BTC rather than just looking at the profits from the paper value. This means that although the bitcoin fund in El Salvador is in US dollars, they fund it with US dollars and BTC. They only make gains in US dollars but leave the fund with the same number of BTC in it.
We have a trust fund denominated in US dollars, but the fund is funded by both US dollars and BTC.
When the BTC portion is revalued against the accounting currency (USD), we can withdraw some US dollars and leave the trust with the same total.
– Nayib Bukele 🇸🇻 (nayibbukele) October 27, 2021
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El Salvador’s strategy is interesting. However, it is not unique. Bitcoin extremists have always believed that BTC is the currency of the future. Therefore, the asset should not be measured at its value in US dollars. Instead, it should be measured in terms of its value in BTC. Ergo, 1 BTC = 1 BTC.
Featured image from Payments Journal, chart from TradingView.com