Bitcoin Sinks, and One Nation Happily 'Buys the Dip!'

El Salvador, where the cryptocurrency is legal tender, has so far lost a lot of money on its bet
By John Johnson,  Newser Staff
Posted May 10, 2022 12:40 PM CDT
El Salvador Doubles Down on Risky Bitcoin Bet
El Salvador President Nayib Bukele.   (AP Photo/Marco Ugarte, File)

By Bloomberg's count, the government of El Salvador has shelled out $103 million since last year to buy 2,301 Bitcoins. As of Tuesday morning, those crypto coins were worth about ... $74 million. That is a sub-optimal return on investment. But President Nayib Bukele, who led the successful push to make Bitcoin legal tender in his nation, remains bullish. On Monday, with Bitcoin crashing along with economic markets of all kinds, he announced the purchase of 500 Bitcoins, reports Barron's. "El Salvador just bought the dip!" Bukele himself tweeted. (Those 500 coins are included in the above total calculated by Bloomberg.)

Bukele bought the coins for a bit more than $30,000 each, reflecting the cryptocurrency's wild ride of late. The price is down 40% since Bitcoin became legal tender in El Salvador in September, per Reuters. On the other hand, Bukele briefly looked like a genius when the price rose to more than $68,000 in late 2021. The IMF, for one, isn't thrilled with that kind of volatility, and it urged El Salvador this year to reverse itself, but Bukele is only doubling down. A story at Fortune, however, notes that regular Salvadorans apparently don't share his fervor.

The government set up Bitcoin ATMs and launched a national e-wallet called "Chivo" in a bid to normalize use of the coin. But a new survey suggests that the vast majority of Salvadorans stopped using the e-wallet after claiming the $30 incentive (in Bitcoin, naturally) to try it. And of the 20% still using Chivo, most are doing so to either store or trade dollars, not the cryptocurrency. However, Fortune also notes an opposite trend: The Central African Republic and Panama are moving toward adopting Bitcoin as legal tender as well. (More El Salvador stories.)

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