El Salvador has acquired an additional 12 Bitcoin for its national reserve, reinforcing its commitment to cryptocurrency despite a recent agreement with the International Monetary Fund (IMF) that suggested a scaling back of some crypto initiatives. This move signals the country's determination to continue its pioneering Bitcoin strategy.
Latest Bitcoin Acquisitions
On January 19, the National Bitcoin Office of El Salvador announced the purchase of 11 Bitcoin, valued at over one million dollars, for its Strategic Bitcoin Reserve. An additional Bitcoin was acquired on January 20 for $106,000. According to the official portfolio tracker, the nation’s holdings now total 6,044 BTC, worth approximately $610 million, based on Bitcoin’s price of around $101,000 at the time of reporting.
A spokesperson from the Bitcoin Office confirmed the country’s intention to continue accumulating Bitcoin, with plans to intensify acquisitions in 2025. They emphasized that El Salvador has achieved a significant rebrand and serves as a case study for successful national strategy.
Market Context and Historical Highs
Bitcoin reached a notable milestone on January 20, briefly surpassing $109,000 and breaking its previous all-time high of $108,000 set on December 17. This surge occurred just hours before the inauguration of the 47th US president.
The Salvadoran government, led by President Nayib Bukele, recently secured a $1.4 billion financing agreement with the IMF. As part of this arrangement, the country agreed to reduce certain Bitcoin-related activities, such as making private sector acceptance of Bitcoin voluntary and scaling back government involvement in the Chivo crypto wallet.
Despite these commitments, the government purchased $1 million worth of Bitcoin the day after the deal was announced. Stacy Herbert, Director of the National Bitcoin Office, stated that the country’s Bitcoin strategy remains unchanged.
Strategic Reserve and Global Influence
El Salvador became the first country to adopt Bitcoin as legal tender in September 2021. The government’s Bitcoin Country strategy has enabled it to accumulate the sixth-largest government holdings of Bitcoin globally. The spokesperson highlighted that this pioneering approach has positioned El Salvador as a model that even larger economies are considering emulating.
Several US states have proposed legislation to establish strategic Bitcoin reserves, and there is speculation that the US federal government may explore similar policies. The Salvadoran government remains confident in its strategy, questioning why it would alter a course that provides a competitive advantage.
Public Adoption and Profitability
Despite the government’s enthusiastic adoption of Bitcoin, public usage remains limited. A recent survey revealed that 92% of Salvadorans do not use Bitcoin for transactions, a slight increase from 88% in 2023.
However, the national Bitcoin investment has proven financially successful. As of January 20, the country’s Bitcoin stockpile showed a profit of $179 million, thanks to the significant appreciation in the cryptocurrency’s value.
Global Context and Other Nations
El Salvador is not alone in its efforts to accumulate Bitcoin. Bhutan, for example, has been quietly mining Bitcoin for years. In September, blockchain analytics firm Arkham Intelligence revealed that Bhutan holds approximately $780 million in digital assets.
This trend indicates a growing interest among nations in integrating cryptocurrency into their economic strategies, though approaches and levels of commitment vary.
Frequently Asked Questions
Why does El Salvador continue to buy Bitcoin despite its IMF agreement?
El Salvador remains committed to its Bitcoin strategy as it believes this approach offers long-term economic benefits and a competitive advantage. The government views Bitcoin as a strategic reserve asset and has no plans to discontinue acquisitions.
How much Bitcoin does El Salvador currently hold?
As of recent acquisitions, El Salvador holds 6,044 Bitcoin, valued at approximately $610 million based on recent market prices.
What is the public sentiment in El Salvador regarding Bitcoin?
Surveys indicate that the majority of Salvadorans do not use Bitcoin for daily transactions, with 92% reporting no usage. However, the government’s investment has been profitable, generating significant returns.
Are other countries adopting similar Bitcoin strategies?
Yes, several US states are considering legislation to establish strategic Bitcoin reserves, and there is speculation about federal-level interest. Other nations, like Bhutan, are also accumulating cryptocurrency through mining and investments.
What is the Strategic Bitcoin Reserve?
The Strategic Bitcoin Reserve is a national policy initiated by El Salvador to accumulate and hold Bitcoin as a reserve asset. This approach aims to diversify national holdings and leverage the potential growth of cryptocurrency.
How has Bitcoin’s price performance impacted El Salvador’s reserves?
The appreciation of Bitcoin has significantly increased the value of El Salvador’s holdings, resulting in a profit of $179 million as of January 20. This financial success reinforces the government’s strategy. For those interested in tracking such trends, you can explore more strategies here.