There is no stopping El Salvador, a South American country, from going all-in on bitcoin. The country has purchased more bitcoins as the price has dropped by 20% to below $45,000. The drop created a massive buying opportunity, which investors are currently taking advantage of. This is El Salvador’s second purchase this week.
President Nayib Bukele made the announcement on his personal Twitter account. Bukele tweeted that his country had just purchased 150 bitcoin for an average price of $48,670. That is a total of $7.3 million spent. El Salvador now has over 1,000 bitcoins as a result of the purchase. As of this writing, that amounted to more than $47.4 million in BTC.
Bitcoin fell nearly 20% on Friday to hit a new local low since its all-time high in November. The massive drop wiped out bullish traders and caused a general liquidation worth $1.3 billion according to ByBit.
Although the coin has recovered $5,000 from the initial drop to $42,200, analysts are worried that a bearish trend might be starting. But investors are generally bullish on the coin and consider the dip a buying opportunity to stack more bitcoin before the next bullish trend begins. Bitcoin investors hold the largest volume of the entire crypto market cap.
Bitcoin Volatility Concerns
Once again, bitcoin gives its critics more reasons to condemn its price structure. The volatility of bitcoin has been criticized by many and held as the reason why it is unfit for adoption as a national legal tender. Indeed, El Salvador has come under fire from some of its citizens and other international commentators.
Shortly after Bukele first announced that bitcoin had been adopted in his country, the price of BTC fell, sparking several protests. But it quickly recovered and made some gains. In November, bitcoin hit a new ATH of $69,000. But last week, it lost $2,000 within a few minutes of the announcement of a new coronavirus strain discovered in South Africa.
Again, it recovered and began to approach the $59,000 resistance. Investors however woke to the news of several bearish candles on the 4-hour chart that saw BTC reach as low as $42,200 on TradingView. Incidentally, it happened shortly after El Salvador decided to purchase more bitcoin. But the country is not stopping.
Not Just Buying, El Salvador to Mine Bitcoin
President Bukele recently announced that El Salvador would tap its active volcanoes to generate electricity for mining bitcoin. The country is not just buying the digital asset but will now earn mining rewards.
It has become increasingly costly to mine 1 BTC, but mining and manufacturing firms are considering new mining equipment that is more energy-efficient and increases the profit margin.
Elsewhere, in Africa, Zimbabwe is reportedly considering the adoption of bitcoin, following El Salvador’s example. Zimbabwe’s economy has taken a heavy beating in the last half-century and the conditions are terrible. The government is reportedly interested in the new digital asset financial system as it seeks a remedy.