“Stop Looking at the Graph and Enjoy Life”: El Salvador’s President on BTC Price Slump

El Salvador’s bitcoin-friendly President Nayib Bukele has shared an advice to all Bitcoiners as the cryptocurrency ecosystem has continued to take a deep dive down.

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Over the weekend, the price of Bitcoin slumped further from its earlier 18-months low to $17,708.62. With the price of Bitcoin going below what was earlier envisaged, altcoins like Ethereum (ETH), Solana (SOL), Binance Coin (BNB), and Cardano (ADA) amongst others also saw multi-year lows, signalling a full-blown crypto winter.

With this bearish outlook in place, Nayib Bukele took to Twitter and asked his followers with interests and investments in Bitcoin to forget about the charts and explore other things. Per his words:


“I see that some people are worried or anxious about the #Bitcoin market price. My advice: stop looking at the graph and enjoy life. If you invested in #BTC your investment is safe and its value will immensely grow after the bear market.”


Those who have been following events in the space will recall that El Salvador under Nayib Bukele became the first country to legalize Bitcoin and make it a legal tender on its shores back in 2021. Since then, Bukele has been buying Bitcoin dips, with a lot of other proposed projects anchored on Bitcoin.


While Bukele is amongst those reeling from the current fall in the price of Bitcoin, he added in the tweet that “patience is the key” to getting the most out of any investment that one may have in Bitcoin or other altcoins at the moment.


The current collapse of crypto prices has stirred quite a number of ugly operational incapabilities among crypto entities. Celsius Network, Babel Finance, and Three Arrows Capital (3AC) are amongst the few companies feeling the heat of the ongoing crypto market price slump.

Image source: Shutterstock


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El Salvador to Elevate Bitcoin Status by Issuing Bonds

El Salvador is planning to issue its first bitcoin bond next month, the Central American country’s Finance Minister Alejandro Zelaya announced.

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Zelaya elaborated that El Salvador is working to have the bond “totally ready” for issuance between March 15 and March 20 as a means to strengthen the country’s economy.

“If we really want to build this country, we have to invest in it like this,” Zelaya said speaking at a local news program.

Furthermore, Zelaya said that the government is still planning to issue $1 billion for the first bond, as previously mentioned on November 20. However, Zelaya also mentioned that there are chances of oversubscription for the bond by about $500 million minimum.

Buyers are expected to have easier access to the bond than traditional ones. It will allow a minimum purchase of $100 and does not require a stockbroker to conduct the transactions. 

The bond will be issued on Blockstream’s Liquid Network sidechain and they “will comply with all the regulations of the financial markets,” such as know-your-customer (KYC) and due diligence practices.

The bitcoin bond idea was first introduced at an event on November 20, by El Salvador’s president Nayib Bukele and Blockstream chief strategy officer Samson Mow.

Fitch downgrades El Salvador into “Junk” level

However, Fitch Ratings – a top American credit rating agency – has downgraded El Salvador’s Long-Term Foreign-Currency Issuer Default Ratings (IDR) to ‘CCC’ from ‘B-‘, citing risks from its adoption of Bitcoin as legal tender last year, according to Bloomberg. 

In a report, Fitch Ratings stated that the downgrade shows the country’s critical increase in financing risks that have risen from increased reliance on short-term debt.

“weakening of institutions and concentration of power in the presidency has increased policy unpredictability, and the adoption of bitcoin as legal tender has added uncertainty about the potential for an International Monetary Fund (IMF) program that would unlock financing for 2022-2023.”

Although crypto enthusiasts have been keen on bitcoin bonds, several financial experts have argued on the fact that whether they are a good investment.

The IMF recently noted that some of its directors “expressed concern over the risks associated with issuing Bitcoin-backed bonds.”

According to January 26, 2022, a report by Blokchain.News, the IMF expressed concern about risks related to El Salvador’s issuance of bitcoin-backed bonds. It urged El Salvador to terminate bitcoin as legal tender as soon as possible due to the high price volatility of the digital currency being a major risk.

El Salvador became the first country to adopt bitcoin as legal tender since June 2021, with 62 votes approval out of 84 through its parliament. In September, Bitcoin officially was circulated in this country as legal tender.

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Bitcoin Suffers 10% Pull Back On El Salvador’s Debut, Funding Rates Dip

Bitcoin’s price plummeted over 10% on early Tuesday, as El Salvador announced that it would officially accept the major cryptocurrency as the nation’s legal tender. 

According to CoinMarketCap, Bitcoin’s slump from Monday accelerated as the crypto failed to hold its $50,000 price level — sliding from $51,000 to $44,700 within a single hour. The sudden sell-off resulted in $1.44 billion in futures liquidations of Bitcoin trades in the past 24 hours, according to data from ByBt. 

The single largest reported liquidation occurred on Huobi-BTC — worth $43.7 million at the time. As expected, the vast majority of the liquidations were longs, representing about 88% of the total liquidations. 

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Since dropping to weekly lows, the price of Bitcoin rebounded up to as high as $47,500. At press time, BTC is hovering at $46,500 across major exchanges Binance, Coinbase, and Huobi. 

Bitcoin (BTC/USD)

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Following the brunt of the pullback, El Salvador president Nayib Bukele tweeted that he is “[b]uying the dip,” purchasing another 150 BTC worth about $6.9 million, adding on top of the 400 BTC position. The average cost of the purchase appears to be around the $46,000 price range. 

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Is This the “Reset” Bitcoin Needed to Trend Higher? 

Data from Glassnode shows that the mean Bitcoin funding rate (average across all exchanges) had steadily increased throughout August.

Funding rates rose from 0.015% in early August to as high as 0.03% at the start of September.

Derivatives exchange ByBit saw its funding rate rise to as high as 0.085% in late August.

Relatively high funding rates can indicate that the market is overheating, with too many traders being overleveraged. More often than not, high funding rates will lead to a pullback — which was the case earlier this May. 

More specifically, funding rates on major exchanges Binance and Huobi dropped to 0.023% and 0.021% at the peak of the sell-off. OKEx, on the other hand, reverted to a negative funding rate of -0.009%, per Bybt. 

As Bitcoin and the broader crypto market slightly recovered from the sell-off, funding rates have stabilized at 0.01% for Binance, Huobi, and ByBit. Funding rate on OKEx remains at a negative of -0.0005%.

With the futures market cooling down, it’s likely that price levels will begin to stabilize once again. 

Featured image from UnSplash


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