El Salvadoran President Nayib Bukele tweeted earlier today that his government took advantage of the recent drop in bitcoin prices to add 420 BTC to the national reserve.
"Long wait but worth it. We just bought the dip!" he tweeted.
Shortly afterward, he tweeted again: "We have profited from the bitcoin we just bought." In the time between the two tweets, the value of bitcoin in the country increased by about 0.4 percent (100,000).
If 1 BTC = 1 BTC, how can we make a profit?
We have a trust fund denominated in USD, but the trust is funded with both USD and BTC.
When the Bitcoin portion is revalued against the accounting currency (USD), we can withdraw some USD while the total funds of the trust remain unchanged.
— Nayib Bukele (@nayibbukele) October 27, 2021
Many onlookers online are speculating on the significance of Salvador's purchase of 420 bitcoins, a popular slang term for smoking marijuana.
Reddit user "theylie86" commented, using another buzzword in marijuana culture: "Great! Blaze it!"
Reddit user EGarrett speculated: "I'm starting to believe he did it on purpose. Actually, now that I've checked he was born in 1981, so he probably did it on purpose. Interesting to see how millennials start inheriting the world as a result .”
The U.S. is being surpassed by El Salvador in terms of who holds more Bitcoin, which is ridiculous.
It should be our national policy to match every BTC purchase by a foreign government.
The next competition is not the number of nukes, but how many bitcoins you own.
— Pomp (@APompliano) October 27, 2021
The 420 bitcoins are worth about $24.6 million. The purchase brings El Salvador's total bitcoin holdings to 1,120, worth about $87.4 million. The average purchase price in the country is estimated at just over $53,300.
El Salvador first bought two batches of 200 BTC on September 6 this year, and then bought another 150 a day later, when it also became the first country in the world to use Bitcoin as legal tender. On Sept. 19, El Salvador purchased another 150 BTC, bringing the total number of Bitcoins held in the country to 700.
Other observers, however, were less sanguine about the recent purchases, expressing concerns about the safety of bitcoin held in the country.
Twitter user @dolomiteHEX replied to Nayib Bukele's tweet asking, "Who holds their private keys?" The user also asked what would happen if El Salvador was hacked.
User @EnocWatcher expressed the same concern, adding that bitcoin purchased with taxpayer money should be stored in a publicly disclosed entity.
El Salvador's central bank governor, Douglas Rodriguez, told Bloomberg earlier this month that El Salvador will continue investing in anticipation that bitcoin will soon lose its reputation as a speculative asset and become a legitimate payment system.
“We don’t see any risk. Maybe an upside risk,” Rodriguez said. Bitcoin will “become a payment system, a system of financial inclusion.”
After hitting an all-time high of $66,976 earlier this month, bitcoin's price recently started to decline, falling as low as $58,570. Despite the decline, Bitcoin is still up about 20% since Sept. 7.
Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.
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