El Salvador is no stranger to buying the dip when Bitcoin (BTC) drops.
And they just did it again.
Bitcoin was down approximately 12% late Friday night, January 21, 2022, bringing its value to about $36,500. This dip in value made it possible for El Salvador to purchase 410 bitcoins for approximately $15 million.
The nation now holds over 1,800 BTC and plans to issue a $1 million 10-year bitcoin bond in 2022. This follows the Bitcoin Law passed by the country on June 9, 2021, making BTC legal tender effective September 7, 2021.
President Nayib Bukele Makes a Bold Move
In the hours before the law went into effect, El Salvador President Nayib Bukele, who describes himself on Twitter as the “CEO of El Salvador,” announced the purchase of 550 BTC, with plans to purchase more. And purchase more, he has.
Bukele has been consistently buying the dip the past several months. His behavior displays confidence in the long-term prospects of BTC: the law states that goods, services, and taxes can be paid using bitcoin and that every economic agent must accept the use of cryptocurrency as a legal form of payment.
This has placed bitcoin on equal footing with the U.S. dollar, which has been circulating in El Salvador as the primary currency since 2001.
First Country to Make BTC Legal Tender
As the first country to make the move of accepting bitcoin as legal tender, citizens get to enjoy the perks of no capital gains taxes for bitcoin holders.
El Salvador is also one of the few countries in the world with no property tax. And foreigners who invest as little as three bitcoins in the country are granted residency.
While widespread adoption of the cryptocurrency will likely take years, the country has been actively making it more accessible by installing bitcoin ATMs that allow people to convert BTC into dollars.
El Salvador also released a government-controlled cryptocurrency wallet, Chivo. The Chivo app can be downloaded on a phone to allow users to send and receive cryptocurrency while also storing their digital money.
Another benefit of the change allows the millions of Salvadorans living abroad to send money back to their friends and family in El Salvador without having to worry about fees from service providers such as Western Union. This is expected to save residents upwards of $400 million per year in commissions due to the high percentage of people sending money to those back home in El Salvador.
The move has not been without opposition. It appears as though a significant portion of the population is unsure of the decision, with many not knowing how to use the cryptocurrency. Others feel as though the move, while good for big investors, has made things more difficult for regular citizens.
The country’s decision to accept crypto as legal tender may pave the way for other countries, including Panama, Paraguay, Venezuela, Anguilla, and even the United States.
The Pacific Island nation of Tonga has already followed El Salvador’s lead, as it expects to make BTC legal tender by November or December of 2022.