El Salvador has reaffirmed its commitment to Bitcoin, announcing plans to continue purchasing the cryptocurrency, potentially at an accelerated pace, for its strategic reserve. This decision comes despite a volatile crypto market, showcasing the country’s long-term belief in Bitcoin as a valuable asset.
- Current Strategy: El Salvador has been buying one Bitcoin daily since November 2022, under President Nayib Bukele’s directive. This strategy is part of the country’s broader initiative to adopt Bitcoin as legal tender, which was implemented in September 2021, making El Salvador the first country to do so.
- Recent Developments: Posts on X from December 19, 2024, indicate that El Salvador might increase its Bitcoin acquisition rate. This move is seen as a continuation of Bukele’s strategy to bolster the country’s economic reserves with Bitcoin, especially in light of Bitcoin’s price surpassing $100,000, which has significantly increased the unrealized profits on El Salvador’s holdings.
- Economic Impact: By continuing to buy Bitcoin, El Salvador aims to leverage its geothermal energy resources for mining and maintain a steady accumulation strategy, which has not only been about direct purchases but also includes revenue from passport sales, currency conversions, and other government services that accept Bitcoin.
- Public and International Response: The strategy has been met with mixed reactions. Domestically, there’s skepticism about the benefits of Bitcoin adoption for the average Salvadoran, given the currency’s volatility and the initial challenges with adoption. Internationally, while some applaud El Salvador’s pioneering approach, financial institutions like the IMF have expressed concerns over the risks associated with Bitcoin’s volatility and the implications for financial stability.
- Future Plans: The government is also looking into integrating Bitcoin more deeply into its financial system, with proposals for creating a private investment bank that would operate with both Bitcoin and the US dollar. This further cements El Salvador’s commitment to cryptocurrency as part of its economic strategy.
El Salvador’s ongoing Bitcoin purchases reflect a gamble on the cryptocurrency’s long-term value, aiming to position the country at the forefront of digital currency adoption despite global economic uncertainties and criticisms.
El Salvador says it will continue buying Bitcoin, possibly at an accelerated pace for its strategic reserve.