El Hodlador not afraid to pile in on Bitcoin
El Salvador’s President Nayib Bukele has proven to be quite a stubborn individual.
Despite warnings from the IMF that Bitcoin adoption risks the country’s economic future, the popular leader has remained steadfast about tying El Salvador’s success to Bitcoin, for better or worse. In a tongue-in-cheek tweet, he even labeled his country “El Hodlador” for his personal propensity to top up on Bitcoin purchases when the price is down. As such, Bukele did not hesitate to buy the dip once again during Bitcoin’s latest price downturn.
Bukele announced that the country had purchased 410 more bitcoins, bringing its total to 1,801 bitcoins since the currency’s adoption as legal tender. Although Bukele dubbed his purchase with a tweet saying “Some guys are selling really cheap,” El Salvador is barely in profit on its latest trade. The country bought its latest set of Bitcoin at an average price of $48,000 AUD, which was indeed close to Bitcoin’s local bottom. However, the price has since not rebounded more than 5%, and Bukele’s $100K prediction currently looks a long way off.
El Salvador not doing that great on the trading front
Even Bukele’s staunchest supporters cannot deny that he has had a hard time in the markets.
The country started purchasing Bitcoin in September when prices were still trending upwards after a summer correction had seen Bitcoin bottom slightly above $42,000 AUD. Since the market began its significant correction in November, El Salvador’s Bitcoin purchases have all drifted away from the profit zone. In fact, save for its latest purchase, all its previous Bitcoin purchases are currently trading at a loss. According to a Bloomberg report, El Salvador was down as much as $100 million AUD at the time the report was published (January 12).
Unsurprisingly, this has raised questions by citizens and industry experts alike, both questioning the economic logic behind the country’s Bitcoin purchases. After Bukele revealed that he trades Bitcoin from his phone, he doubled down on a Bloomberg report about his questionable trading habits, saying he was doing so “naked.”
Equally, the country’s officials have had to explain that Bukele is not just a speculator armed with a sovereign nation’s economic budget and a trading app. In an interview on Frente a Frente, a Salvadorian TV show, Finance Minister Alejandro Zelaya said that the country was “of course” using technology to justify its bitcoin purchases and that there were “procedures” in place for doing so. However, the minister declined to detail what these procedures looked like.
Considering that Bukele’s propensity to buy Bitcoin at a whim eerily mirrors that of former US President Trump to take to Twitter and let off steam, his critics like Vitalik Buterin may be onto something. El Salvador is treading a thin path between economic audacity and outright gambling in the hands of a social media-loving president. For the sake of EL Salvador’s finances, a Bitcoin rally cannot come early enough.