April 25, 2024

El Salvador Purchases 500 BTC as Strong Recovery Eludes the Market

More Bitcoin Hits El Salvador’s Reserves

The country has continued to increase its Bitcoin holdings after it bought 500 units of BTC on the 9th of May. In a statement by El Salvador’s President, Nayib Bukele, the country currently has more than 2,300 BTC in its possession. This figure amounts to 0.0109% of the total market supply of BTC, thus, giving El Salvador an advantage ahead of other countries that haven’t bought into the idea of buying or holding the asset.  

It should be remembered that El Salvador was the world’s first country to buy Bitcoin last year September. At the time in question, Bitcoin was having a bullish run that got it selling at an all-time high of almost $69,000. As a result, many international financial bodies have put El Salvador under pressure not to buy Bitcoin.

It should also be noted that El Salvador, though an independent country, does not possess a fiat local currency. It instead uses the US Dollar locally and has made a decision to go in the direction of Bitcoin for local use.

The declining conditions of the cryptocurrency market give El Salvador an opportunity to carry out the dollar-cost averaging tactics. The entire cryptocurrency market and especially Bitcoin have been trading very low for various reasons. One of such reasons is the implosion of the Terra (LUNA) blockchain system.

Over the past two weeks, UST lost its peg to the US Dollar and consequently fell under $0.10 for a coin. After being pushed to a literal zero value, the LUNA token now trades under $0.002 for a coin all the way from its once upon a time value of more than $110. It exemplifies how the digital asset got over 99% of its market value eroded in just a few days.

What happened in the ecosystem of Terra dragged Bitcoin to the lowest price level it had been in over a year as it slid to nearly $26,000 for a coin. It even fell lower than that in some crypto exchanges. In short, every digital asset fell to new lows in the past week.

Therefore, the digital assets sector saw a huge sell-off that enabled El Salvador to accumulate more Bitcoin into its national reserves.

Market Dynamics

It now looks like Bitcoin has got some stability between the range of $29,500 to $30,500. But the market’s volatility continues. Seeing what happens with digital assets in few days would be very important given that Solana, Ethereum and XRP are all affected by the slide in the cryptocurrency sector.

One other factor to bring under consideration is the dominance of Bitcoin in the wider market. As stated by CoinMarketCap, the asset has got to its highest point of dominance at more that 44% since last October. 

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