El Salvador buys the bitcoin dip, adding 500 coins to its balance sheet

El Salvador just added another $15.5 million worth of bitcoin to its balance sheet, as the world’s most popular cryptocurrency continues its sell-off.

In a tweet on Monday, President Nayib Bukele revealed that the country bought the dip, adding another 500 bitcoin to government coffers.

It is El Salvador’s largest coin purchase since it first began adding the digital currency to its balance sheet in Sept. 2021 — the same month it became the first country to adopt bitcoin as legal tender, alongside the U.S. dollar.

Bitcoin is down more than 8% in the last 24 hours, and it’s nearly 55% off its November all-time high.

El Salvador purchased bitcoin at an average price of $30,744, according to the president’s tweet.

The country’s total reserve is up to 2,301 bitcoin, or about $71.7 million at current prices, based on data tracked by Bloomberg.

This is the latest in a string of dip buys over the last nine months, in which President Bukele — who has tethered his political fate to the success of the country’s bitcoin experiment — has doubled down on his bitcoin bet, as the crypto market plummets.

The country’s decision to lean into bitcoin is not without its skeptics — a contingent that has been gaining momentum in recent months.

For months, the International Monetary Fund has bemoaned Bukele’s bitcoin experiment.

In January, the IMF pushed El Salvador to ditch bitcoin as legal tender.

IMF directors “stressed that there are large risks associated with the use of bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities.”

The report, which was published after bilateral talks with El Salvador, went on to “urge” authorities to narrow the scope of its bitcoin law by removing bitcoin’s status as legal money.

The IMF report went on to say that some directors had expressed concern over the risks associated with issuing bitcoin-backed bonds, referring to the president’s plan to raise $1 billion via a “Bitcoin Bond” in partnership with Blockstream, a digital assets infrastructure company. However, that bond offering was put on ice in March, due to “unfavorable market conditions,” according to Finance Minister Alejandro Zelaya.

Part of El Salvador’s nationwide move into bitcoin also involved launching a national virtual wallet called Chivo that offers no-fee transactions and allows for quick cross-border payments. For a country where 70% of citizens do not have access to traditional financial services, Chivo is meant to offer a convenient onramp for those who have never been a part of the banking system.

IMF directors agreed that the Chivo e-wallet could facilitate digital means of payment, thereby helping to “boost financial inclusion,” though they emphasized the need for “strict regulation and oversight.” Many Salvadorans have reported cases of identity theft, in which hackers use their national ID number to open a Chivo e-wallet, in order to claim the free $30 worth of bitcoin offered by the government as an incentive.

El Salvador has also been trying since early 2021 to secure a $1.3 billion loan from the IMF — an effort that appears to have soured over this bitcoin row.

The country will need to figure out some other backstop to shore up its finances. The IMF predicts that under current policies, public debt will rise to 96% of GDP by 2026, putting the country on “an unsustainable path.”