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.
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.
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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