El Salvador’s president Nayib Bukele was making another power move when he announced that his country will build and run the world’s first Bitcoin city. The project will be financed by so-called volcano bonds which also will be used to buy back Bitcoin from the market and share the profit after 5 years with the investors. But aside from building futuristic cities and making Bitcoin legal tender, El Salvador has a knack for buying dips.
El Salvador bought another 100 BTC
Since 2020 many companies opted for an investment in Bitcoin. Among them MicroStrategy which is leading the way with an investment north of 100.000 BTC. But there are also a couple of countries holding Bitcoin. Many of them got their hands on BTC because they were seizing wallets during law enforcement investigations. But not El Salvador, instead, President Bukele is using dips in the market to finance additional infrastructure.
On November 27th Bukele announced via Twitter that the country bought 100 BTC when the price fell down to 54.377 US-Dollars. Adding another stack El Salvadors owns now over 1.220 BTC at the time of writing. The question is if other countries are going to follow the example. Many experts believe that this could be the case should the countries Bitcoin treasury become a success story. For now, the country is using Bitcoin as an advantage despite the fact that its economy is considered very small and less significant.
Inflation is still rising
The IMF has warned El Salvador to use Bitcoin as legal tender and adding it to the national treasury. But inflation is increasing, not slowly but more rapidly as data shows. Many analysts along with the ECB and the FED believe that inflation will have a healthy effect on the global economy and that it is only transitory.
Bitcoiners on the other hand are very skeptical about this assessment and view the increasing inflation as a systemic crisis that will do more harm than good. They believe that Bitcoin will save everyday people and even countries because it’s a scarce good that holds many advantages over traditional assets like gold.
It remains to be seen who is right and who is wrong taking such strong opinions towards inflation. What cannot be denied is the fact that despite its high volatility Bitcoin is one of the most successful assets in the 21st century. If this success is going to continue inflation might not be the most important thing when it comes down to the question of countries should whether own Bitcoin or not.