As a seasoned analyst with over two decades of experience in global finance, I find El Salvador’s Bitcoin journey fascinating and audacious. The move to adopt Bitcoin as legal tender was unprecedented and, if executed correctly, could potentially revolutionize financial systems worldwide.
On social media, President Nayib Bukele of El Salvador pointed out the untapped benefits from their Bitcoin investments, as the digital currency reached a new milestone of over $100,000 for the first time.
On December 5th, Bitcoin (BTC) hit an all-time high of $100,000, causing excitement within the cryptocurrency community. Meanwhile, Autism Capital, a crypto-centric account on platform X, urged President Bukele to reveal El Salvador’s Bitcoin holdings in order to taunt the skeptics. In response, Bukele disclosed El Salvador’s Bitcoin assets on platform X.
In his recent announcement, it’s clear that El Salvador has invested close to $270 million in Bitcoin since first adopting the digital currency. Interestingly, there are no indications that any Bitcoin has been offloaded from their holdings. Moreover, the current value of these Bitcoins shows an unrealized profit of approximately $333 million.
El Salvador’s Bitcoin journey
Starting from September 7, 2021, Bitcoin became an officially recognized form of currency for transactions within El Salvador, making it the first country to do so according to its Bitcoin Law. Even a day before this, on September 6, the government had already bought 200 Bitcoins.
Following that point, El Salvador has persistently added Bitcoin to its holdings. On November 17, 2022, Bukele revealed plans for a dollar-based investment approach known as dollar-cost averaging (DCA), intending to purchase a single Bitcoin each day.
According to Nayib Tracker, a system designed for monitoring Bitcoin investments in the nation, El Salvador currently owns approximately 6,180 Bitcoins. This platform calculates the average cost of each Bitcoin at around $44,739.88, which means that given the current market rates, the country has seen an increase of roughly 122% in its Bitcoin investment.
As an analyst, I’ve observed that alongside the profits from Bitcoin (BTC), El Salvador has reported additional advantages since embracing this digital currency. Notably, the nation’s adoption of Bitcoin has significantly stimulated tourism interest.
IMF calls on El Salvador to ditch Bitcoin
Regardless of the nation’s claimed achievements, the International Monetary Fund (IMF) has persistently advised El Salvador to reassess its Bitcoin strategies.
On January 25, 2022, the International Monetary Fund (IMF) advised El Salvador to halt treating Bitcoin as a legitimate currency due to concerns about financial instability, while at the same time recognizing its capacity to enhance financial accessibility.
On October 3rd, the International Monetary Fund (IMF) once again urged El Salvador to reconsider its Bitcoin policies and make some adjustments. In particular, the IMF’s communications director, Julie Kozack, suggested that El Salvador should revise its Bitcoin Law so it applies more narrowly, and also restrict the involvement of the public sector in Bitcoin transactions to reduce potential risks.
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2024-12-08 15:03