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Facepalm: Yesterday was the first day that El Salvador adopted Bitcoin as an official currency, and what happened? BTC crashed to its lowest point in almost a month, from $52,000 to under $43,000. But President Nayib Bukele was far from worried; he took advantage of the fall to buy an extra 150 Bitcoins, increasing the country's holdings to around 550 in total, worth about $25 million.
Just a few months after adopting Bitcoin as legal tender, it became an official currency of El Salvador yesterday. It's hoped that the move will make it easier for the huge number of El Salvadorians living abroad to send money home to their families—the government says Bitcoin could save the country $400 million per year in transaction fees, though the BBC believes this to be closer to $170 million—and with three-quarters of the population lacking a bank account, proponents say adopting Bitcoin will facilitate quick money transfers.
But not everyone in El Salvador thinks moving to Bitcoin is a good idea. There have been protests over its adoption, with many citing its volatile nature as a reason to be wary. These naysayers likely felt justified yesterday when Bitcoin dipped by around 15% to under $43,000. BTC has rebounded slightly since then and is hovering close to $45,000 at the time of writing.
One of Bukele's opponents said the drop caused El Salvador to lose $3 million, but the president took a different view, tweeting that the country was "Buying the Dip"—taking advantage of the lower price by buying more. It has now added 150 Bitcoins to the 400 it already held. "We saved a million in printed paper," Bukele wrote.
Forbes writes that the price drop began when El Salvador's wallet system experienced difficulties upon its debut. "Heightened trading volume then fueled speculation about institutions selling off large stakes and even triggered brief outages and trading delays on many of the world's largest cryptocurrency exchanges," the publication explains.
Users on Twitter and Reddit were urged to buy $30 worth of Bitcoin yesterday to celebrate the crypto's adoption by El Salvador. Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says that "a "pump and dump scenario is partly playing out."
Image credit: Hi my name is Jacco