The price of Bitcoin has fallen below $30,000 this week. Due to this decline, El Salvador saw an opportunity to buy up the fall in the share price. The president of the country does not have “paper hands” and, in addition to this purchase, shows the new plan of Bitcoin City – a city at the foot of a volcano, completely devoted to Bitcoin.
El Salvador, the South American country known as the first Bitcoin nation, recently stated that it had taken advantage of this drop in the Bitcoin price. More specifically, it was announced that an additional 500 BTC were purchased at an average price of $ 30,744 per coin with a total value of about $ 15.4 million. Thus, the total purchase of the country amounts to about 2000 Bitcoins.
El Salvador relies on DCA
The entire cryptocurrency market has been in the red this week, with all tokens down by more than 10%. The market continues to decline after the US Federal Reserve’s monetary policy announcement last week. In addition, Bitcoin has been approved as a legal tender in the Latin American country, a decision 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 introduction of BTC as a legal tender. When the king of coins became legal money in the nation, she acquired a significant part of the most valuable crypto currency. When it comes to acquiring Bitcoin, El Salvador takes a “buy the dip” approach. If the price of Bitcoin falls, the president declares that additional Bitcoin will be added to the country’s reserve currency fund.
Since El Salvador introduced BTC as a legal tender, it is the cheapest purchase in the country to date. Bukele believes that “some people are selling really cheap,” which supports his long-term goal of widespread adoption of Bitcoin, given the current sell-off in the market.
El Salvador is fully committed to Bitcoin
The country’s decision to adopt BTC as its official currency is not the only step the country has taken to boost the country’s economy. President Bukele 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 release date of the bonds has already been postponed several times.
The residents of El Salvador do not (yet) accept Bitcoin
It is also unfortunate for the president that the residents of El Salvador do not like to switch to Bitcoin and use the Chivo wallet. A few weeks ago, the news came out that 60 percent of the country’s residents dropped the Chivo wallet after receiving the free $ 30 when signing up.
In addition, companies operating in El Salvador are in no hurry to accept Bitcoin. Currently, only 20% of all companies offer payments in Bitcoin. According to reports, there are even companies that used to accept BTC, but have now stopped doing so and returned to the basics.
There is still no breakthrough on taxes either. Only 5% of all residents of El Salvador have chosen to pay their taxes with the Chivo wallet.
The low acceptance rate is most likely related to the volatility of Bitcoin, coupled with the technical complexity of using the Chivo wallet. Especially older people have difficulties with this.
The president posted some photos of Bitcoin City on Instagram. This is supposed to be a city that is being built right next to a volcano. The goal is to operate them entirely with Bitcoin and get the energy mainly from the volcano.
Before we show these pictures, let’s take a look at the plans that were 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 will cost about 300,000 Bitcoins. At that time, the Bitcoin price – a few days after the previous all–time high – was a whopping 15.3 billion euros. Currently, this price is around 9 billion euros.
This is still a high amount, despite the fall in prices. To finance this, Bitcoin bonds will be issued, the proceeds of which will go to this project. Half of it will be used for mining infrastructure, and the other half for the purchase and storage of Bitcoin. For those interested: these bonds are expected in September.
What are the plans?
In the photo that Bukele shared, we see a model of the city. It is a kind of circle with a large Bitcoin square in the middle. Despite the falling Bitcoin price, he seems to be happy to share the pictures of the city. “Bitcoin City looks beautiful. And the airport too,” the president said on his Instagram page.
So it will also be possible to fly to Bitcoin City. The official end date has not yet been announced. In the pictures in the message, we see, among other things, a kind of stadium and other buildings that will populate the city.
President Bukele brags on Twitter
El Salvador recently replenished its Bitcoin reserves by buying 500 BTC at a price of around $ 30,000. This purchase has already allowed the country to make a profit. The president of the country has not hesitated to indicate with it on his Twitter account.
According to the Twitter post, the country’s balance has increased to $ 1 million in just 11 hours, right after the purchase of the Bitcoins. While President Bukele brags about the successful deal, Twitter users have reported that the country is down by a staggering $20 million due to the average purchase price of around $45,000. Bukele said on Twitter:
“I could sell these coins now and make almost a million dollars in just 11 hours, but of course I don’t.“
Since the average purchase price of Bitcoin is high, El Salvador will not get into the green numbers until the price of the largest cryptocurrency has risen by about 40%. In September, the country started buying Bitcoin when BTC was trading for about $50,000.