- Bitcoin is trading more than 50 percent below its all-time high with the market in turmoil but El Salvador and TRON are buying the dip.
- Elsewhere, Microstrategy’s bet on BTC looks shaky as the price dips, and if it goes to $21,000, billions of dollars could be on the line for Michael Saylor.
Bitcoin is getting battered and the top crypto is trading at $31,943, down 17 percent in the past week. Naturally, there are two ways to look at it – that your portfolio has dipped significantly or that this is a prime opportunity to buy the dip. For President Nayib Bukele and TRON, it’s the latter, with both accumulating 1,000 BTC combined as the market selloff continues.
Bukele, the El Salvador president who seems to attract friends and foes in equal measure, revealed on Twitter that he had spent over $15 million to accumulate 500 BTC at an average price of $30,744.
El Salvador just bought the dip! 🇸🇻
500 coins at an average USD price of ~$30,744 🥳#Bitcoin
— Nayib Bukele (@nayibbukele) May 9, 2022
Bukele is a renowned Bitcoin bull whose love for the cryptocurrency has seen him make it legal tender in El Salvador, the first country in the world to take the leap. However. the latest accumulation comes on the backdrop of a survey that revealed that Bukele’s citizenry may not be as devoted to BTC as he is.
The study revealed that most people who downloaded Bukele’s Chivo BTC wallet did so for the free $30 signing bonus and never used it again, but this has obviously done little to dishearten the BTC maximalist.
Read More: 60% of El Salvador Bitcoin wallet users stopped using it after getting the free BTC: Report
El Salvador is not alone in buying the dip. Justin Sun, the controversial founder of TRON is also buying the dip.
We have echoed @nayibbukele’s voice and purchased 500 #BTC with average price 31031.35 for $15,515,675. #Bitcoin https://t.co/f7nMoIeeWX
— H.E. Justin Sun 🅣🌞🇬🇩 (@justinsuntron) May 10, 2022
While the two leaders both acquired the same amount of BTC, their motivations are quite different. For Bukele, the BTC is for use by his people to transact (at least in theory). For Sun, the BTC is for his newest project – the Decentralized USD (USDD).
USDD is an algorithmic stablecoin whose value will be pegged to TRON, much like UST which is tied to LUNA (although events in the past three days have called into question the viability of this type of stablecoin). As CNF reported, Sun announced USDD in April and debuted it on May 5 on TRON. It’s also available on Ethereum and BNB Chain through the BTTC cross-chain protocol.
Read More: TRON’s Justin Sun to launch a decentralized stablecoin USDD, TRON shoots up on the news
Using BTC as a reserve for a stablecoin is a brilliant idea in theory – not only does it ensure that the stablecoin can have its peg maintained through the largest crypto, but it also allows the company to gain profits once its BTC holdings shoot up. But as the crypto market has shown over the years, it’s anything but predictable, and Terra’s UST stablecoin found this out the hard way.
Read More: Biggest test yet for Terra UST – LUNA dips 50% as Binance suspends withdrawals
The Microstrategy Bitcoin conundrum
And while investors bemoan the dip in the value of their crypto portfolios, the biggest BTC bull in the world may have an even bigger problem. Michael Saylor has been snapping up BTC every other week and his Microstrategy is currently the public company with the highest BTC stash. However, not all this BTC has been from the company’s own coffers. Microstrategy has borrowed in excess of $2 billion to buy BTC.
Phone Le, the company’s CFO revealed recently that Microstrategy will face a margin call if BTC hits $21,000. This would force the firm to either add to its collateral or sell off some of its BTC.
When Le made the revelation, BTC was trading at over $41,000 and it seemed highly implausible that it would hit $21,000 in the near future. However, in the past few days, things have changed and on Monday, BTC even dipped below $30,000 for the first time in 10 months. Now, Saylor’s position seems to be in danger if BTC dips further, and analysts say it could hit $19,400 as CNF reported.
Read More: Bitcoin dips to the lowest level in 10 months – here’s why and what’s next
Microstrategy being forced to sell off its crypto holdings would be a big deal. For one, the BTC would be auctioned off at $21,000, way below what the company paid for it, leading to major losses for the company. In addition, it would go against Saylor’s fervent gospel of “sell everything and buy Bitcoin.” Saylor has even suggested that all the gold in the world ($10 trillion in total) should be sold and everything put in BTC.
Read More: “Sell all $10 trillion of gold and buy Bitcoin,” advises MicroStrategy CEO Michel Saylor