El Salvador Goes On A Buying Spree As Bitcoin Dips

Highlights:

  • El Salvador is adopting Bitcoin widely as its legal tender.
  • Recent surveys show that more than one million citizens of El Salvador are using the Chivo Bitcoin wallet.
  • The President of El Salvador, Nayib Bukele announced that the country bought the dip.

What did President Nayib announce?

The President of El Salvador, Nayib Bukele announced that the country bought the recent dip. According to him, the country which recently declared Bitcoin as a legal tender has bought the Bitcoin dip. The President tweeted that the country bought 150 Bitcoins as the cryptocurrency market fell sharply on September 20, 2021. Bitcoin was trading at $43,000, down by almost 9% in a day. The coin fell $10,000 from $53,000 to $43,000 in ten days. This accounts for almost 19% since September 6, 2021.

After the recent addition of 150 Bitcoins made by the El Salvador government, the country now holds over 700 Bitcoins in total. The country bought over 6.75 million dollars-worth of Bitcoin by purchasing 150 Bitcoins assuming they bought the dip at $45,000 average price. In total, the country holds over 25 million dollars-worth of Bitcoin according to approximate calculations based on assumptions of the average buy price.

El Salvador has proved to be bad luck for Bitcoin and the broader market. On the day of the initiation of the legal tender law in El Salvador, Bitcoin and the market witnessed a huge crash. Bitcoin was down by 11% during day close while the overall market was down by much more. This proved to be beneficial for El Salvador as the country was able to buy a huge amount of Bitcoin at a much better price. The President of El Salvador tweeted a thanks to the IMF as a joke for the fall in Bitcoin’s price.

Where is Bitcoin headed?

Bitcoin was down by almost 9% on September 20, 2021 as it dragged down altcoins with it. Popular coins such as Ethereum were down by 9% as it was trading at $3000, while Cardano and XRP were down by 9% and 12% respectively. Even Solana, once the coin resilient to fall down and rally upwards in the face of adversity was down by 10.5%.

Bitcoin can be in for further pain if it witnesses a daily closing below $42,000. The next demand zones or downside targets can be placed at $40,000 and $38,000. However, if investors rush to buy the dip, a reversal in the trend can be witnessed as well. Yet, the coin has a bearish bias looking at the overall market structure. Bitcoin broke a major structure point of $45,000 which makes the bears in the front seat. The giant cryptocurrency must close above the said level so as to regain bullish momentum. Else, El Salvador will get a chance to buy the dip at a discounted price below $40,000.

According to several analysts, the cryptocurrency market may be nearing the top of its current cycle. Thus, investors must maintain a cautious approach towards their investments and look to rebalance their portfolios.

El Salvador
Source: CNBCTV18