By
Chimamanda U. Martha
April 24th, 2024
Bitcoin has corrected further after El Salvador announced its latest purchases. Shall a trend reversal follow up anytime soon?
Bitcoin price has corrected heavily over the last weekend as BTC price slipped under $35,000. However, El Salvador bought the Bitcoin (BTC) dip which was its cheapest ever purchase so far. On Saturday, January 22, President Nayib Bukele announced that El Salvador has purchased an additional 410 BTC worth $15 million.
Nope, I was wrong, didn’t miss it.
El Salvador just bought 410 #bitcoin for only 15 million dollars 🥳
Some guys are selling really cheap 🤷🏻♂️ https://t.co/vEUEzp5UdU
— Nayib Bukele (@nayibbukele) January 21, 2022
The announcement shows that the Latin American country’s latest Bitcoin purchase stands at approximately $36,585 per BTC. El Salvador made Bitcoin (BTC) a legal tender last year in September 2021. The Latin American country saw an opportunity in Bitcoin to overcome its heavy inflation and weak spending power.
Over the last four months, El Salvador has strategically accumulated more than 1,800 Bitcoins at different price points. As said, the latest purchase is reportedly the cheapest Bitcoin acquisition by the country.
Bitcoin Stays Under Pressure
While the Latin American country announced buying the Bitcoin dip, the Bitcoin price has been heading even lower. As of press time, Bitcoin is trading 3.6% down at a price of $34,609 and a market cap of $658 billion.
The world’s largest cryptocurrency has come under severe pressure after a strong run-up last year. The Bitcoin price is down almost 50% from its all-time high of $69,000 last November 2021. On a year-to-date basis, the Bitcoin price is down by nearly 24%. On-chain data provider Glassnode explains:
“Bitcoin is down ~50% from the November ATH, making this the second deepest drawdown in this halving cycle. Corrections in 2017, and early-2021 were much shallower between 20% and 40%, whilst July 2021 reached a drawdown of -54%.”
On the weekly chart, Bitcoin has eroded more than $300 billion worth of investors’ wealth.
What’s Next for Bitcoin?
On the technical chart, Bitcoin seems to be trading in the oversold zone as per the 14-day relative strength index (RSI) of the cryptocurrency. The RSI indicator as of now is currently under 30 which means that the market has fallen faster than expected as bears might take a breather. Speaking to CoinDesk, Lennard Neo, head of research at Stack Funds said:
“Daily RSI at all-time lows doesn’t mean that bitcoin has bottomed out. In our opinion, a good consolidation phase is required to build confidence for investors to re-enter the markets”.
However, a Bitcoin trend reversal may not be on the cards immediately. There’s still a major lack of buying interest from whales.
“Still a lack of large buyers, or what we refer to as “whales” on-chain. This looks at entities with over 1,000 BTC and then filters out exchanges,” wrote William Clemente, the author of Blockware Intelligence.