El Salvador President Nayib Bukele said the country purchased 80 Bitcoin on Friday amid a broader decline in the token’s prices.
The South American country bought 80 Bitcoin at about $19,000 each, valuing the total transaction at $1.5 million. The buy appeared to have slightly boosted Bitcoin prices, helping them briefly retake $20,000.
The buying comes after the world’s largest cryptocurrency broke below $19,000 on Thursday, sinking as low as $18,763 amid a broader rout in risk-driven markets. The token is now trading around $19,430.
Stock markets also tumbled during the U.S. session, with the Nasdaq Composite- Bitcoin’s closest parallel- losing 1.3%. Concerns over rising inflation, a possible recession and the Federal Reserve’s interest rate hikes have eroded markets in the past few months.
Bitcoin prices see mild support after El Salvador buy
El Salvador’s purchase briefly supported prices, helping the token retake the $20,000 level for a few hours.
El Salvador bought today 80 #BTC at $19,000 each! #Bitcoin is the future! Thank you for selling cheap
-Nayib Bukele said in a tweet
But this boost appeared to be short-lived, given that the token is now back to trading below $20,000.
Friday’s purchase is also not the first time Bukele, and by extension El Salvador, has attempted to buy a Bitcoin dip. Earlier this year, Bukele had purchased 300 tokens at an average price of $30,744. Bukele is now down on that investment.
El Salvador is also holding Bitcoin at a substantial loss, although the country’s Finance Minister said the loss has little bearing on the country’s economy.
Is this the dip, or is there more to go?
Given El Salvador’s somewhat unsuccessful track record in timing a Bitcoin dip, it seems likely that there may be more weakness due for the token. With a slump in stock markets showing no signs of stopping, Bitcoin is likely to also weaken further.
A recent forecast sees the token slumping to $13,000– its lowest since mid-2020. But this could also precede a recovery to about $28,000 by end-2022.
In the near-term, Bitcoin has to contend with a possible U.S. recession, which will greatly impair any capital flows to the token.
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