The tale of El Salvador and cryptocurrency is not stopping in the wake of the ongoing Crypto Winter. Instead, it seems that the country is still doubling down on its commitment to bitcoin and the way this digital currency is integrated into the overall economy of the small nation in Latin America. The latest news from the country comes as its President Nayib Bukele stated publicly that his government purchased another batch of BTC tokens. The same happened as these tokens touched very close to their lowest point in nearly two years. However, that is by no means dissuading the same country from trying to capitalize on the market slump and attain additional crypto tokens for its government coffers.
Of course, that is nothing close to a no-brainer decision, as the same crypto prices have been on a downwards trajectory for weeks and show a potential for a further drop-down, which could be even more drastic than the current slump. In that case, the prices of the major tokens would likely see a slash of an additional 50 percent or more, which would be borderline catastrophic for anyone who wants to see a recovery in terms of months and not years. But, El Salvador obviously believes in the future that is shaped by the concept of digital currency and is willing and ready to use its fiat funds to stand behind that vision.
80 BTC Tokens
President Nayib Bukele shared the news of the latest purchase on his Twitter account. The same goes completely in line with his overall approach behind the introduction of bitcoin to his small country. As one of the main agents of this process, Bukele stated on Twitter that the nation bought 80 bitcoin tokens. The government paid 19,000 USD for each of these and provided several screenshots that detail these purchases. Also, the country completed the process through 40 different individual purchases.
Together, they add up to 1.52 million USD and the tokens are now all under the control of the county and its official digital wallet or wallets. Bukele also jokingly stated that he is very pleased with the purchase, as it included a very substantial discount, as he framed. The same is very much in line with the bitcoin maximalist who often underline on social media, esports forums, and similar online locations that market slumps are nothing more than a chance to purchase digital assets through a big discount.
Series of Purchases
It was not long ago that El Salvador purchased its previous batch of BTC tokens. Bukele made the last purchase announcement back in May when the same nation bought 500 BTC tokens for a total price of 15.3 million USD. It paid just short of 31,000 USD for each of those back then. May 2022 already produced a big slip down so the prices of November 2021, when bitcoin was at its highest point in history with over 68,000 USD for a signed token, were already a distant past.
At that point, El Salvador began to buy the dip and seems to stick behind that decision. However, the same experiment is closely followed by many financial experts who keep tabs on its spending. Presently, the figures are not great for the process or its near-future potential.
According to the most recent data, El Salvador is down drastically when it comes to its bitcoin betting strategy. The figures show that it has lost some 55 percent overall on its bitcoin holdings. Starting in September 2021, when the country first declared that BTC is legal tender, the country purchased 2301 BTC tokens for a total price of 103.9 million USD. The same holding is now worth, using the current price range, between 44 million and 48 million USD. Even if BTC would climb back up to its previous record and beat it to 70,000 USD for a single token, El Salvador would not break the crypto bank. In that case, its token holdings would amass a value of 160 million USD, which is around 50 million USD in overall profits.
That is not a small sum by any means, but for an institution of this magnitude – meaning a sovereign country – it still amounts to a relatively trivial gain. Yet, so many positive developments are needed for even that to happen. As things stand now the present Crypto Winter period will likely last at least until 2023 and likely beyond. In that time frame, El Salvador can count on next to nothing in terms of even minuscule profits on its holdings.
El Salvador is not oblivious to the fact that everyone understands their present crypto position. That is why the country tried to address the same issue head-on. In May, Alejandro Zelaya, Finance Minister of El Salvador stated that the amount of BTC tokens that the country has so far purchased – meaning over 100 million USD – present around 0.5 percent of its yearly budget. He also said that because of that, the country’s fiscal position is at extremely minimal risk in regard to the same holdings. In other words, El Salvador is not feeling the pinch of Crypto Winter through its own coffers, at least according to the officials from the government.
But, at the same time, it is hard not to see how this spin on the situation could be nothing more than a form of damage control. The undeniable benefit of the bitcoin experiment for the country is the branding value it got from it. Across the world, people who are both for digital currencies and against them now associate El Salvador with bitcoin. Additionally, the tourist influx also took place, even though in a limited fashion. Many flocked to the country just to see BTC in action as a national currency. These factors make up for the loss of funds in direct investments, which would at the same time appear only if Bukele and the country decided to sell.