On February 25, 2025, the price of Bitcoin fell below $89,000. This fall is its lowest since November 2024 and is considered a critical point.
The decline parallels the recently increased market volatility and institutional rebalancing. Despite this, El Salvador has resumed its Bitcoin purchase after one week of rest. The nation purchased 7 BTC worth approximately $661,000, making this move despite mounting macroeconomic pressures, reflecting its ongoing commitment to its Bitcoin strategy.
Bitcoin Price Decline Amid Institutional Rebalancing
Bitcoin’s price drop can be attributed to market uncertainty driven by shifts in investor sentiment and ETF outflows.
Analysts at Standard Chartered warn that prices could decline further to the “low 80s” before stabilizing. This prediction is due to weak demand from retail and institutional investors.
This price decline has caused institutional players to rebalance their portfolios, increasing selling pressure. Arthur Hayes, co-founder of BitMEX, also speculated that Bitcoin’s price could fall to $70,000 if bearish momentum continues.
El Salvador’s Strategy in Bitcoin Purchases
El Salvador’s latest acquisition of 7 BTC marks its first purchase since pausing its daily Bitcoin buying program on February 18, 2025.
The nation usually purchases 1 Bitcoin per day for its reserve. Currently, it holds 6,088 BTC, which is valued at approximately $558 million at current prices.
The recent purchase follows a pattern of strategic accumulation during price dips.
In early February 2025, the government purchased 12 BTC at an average price of $101,816 per coin and later added another BTC at $99,114. Over the past month, El Salvador has acquired 60 Bitcoins, reinforcing its position as one of the largest sovereign BTC holders.
The purchase occurred despite a December 2024 agreement with the International Monetary Fund (IMF), which secured a $1.4 billion loan in exchange for scaling back certain Bitcoin policies.
However, President Bukele’s administration has maintained its long-term vision, positioning El Salvador as a global leader in Bitcoin’s adoption.
Market Reactions and Future Outlook
El Salvador’s aggressive Bitcoin acquisition strategy has drawn mixed reactions. Critics like economist Peter Schiff argue that Bitcoin’s limited transactional use undermines its value proposition.
However, the nation’s $554 million Bitcoin reserve will be a potential long-term growth asset and a hedge against currency devaluation.
Standard Chartered analysts project that the price of Bitcoin could reach $500,000 by 2028.
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