Bitcoin investments of El Salvador turn to profit, reaching $131 million with a $3.6 million gain amidst market recovery.
In a recent turnaround, the venture of El Salvador into Bitcoin has yielded profit, marking a significant recovery from the recent downturn in the cryptocurrency market. The nation’s total Bitcoin holdings are now valued at $131 million, achieving a net gain of $3.6 million, equivalent to a 2.84% increase. This positive shift comes despite the previous challenges faced during the cryptocurrency bear market.
Former President Nayib Bukele, who recently stepped down to focus on his 2024 reelection campaign, initiated El Salvador’s Bitcoin investment strategy. The country began its journey into cryptocurrency in September 2021 with an initial investment of $10.3 million. Despite a sharp decline in Bitcoin’s value, dropping over 50%, Bukele persisted with the investment strategy, consistently acquiring Bitcoin through 2022.
This approach, known as dollar-cost averaging, saw El Salvador’s Bitcoin portfolio experience significant fluctuations. At one point, the value plummeted to $45 million from an initial book value of $103.9 million. Nonetheless, the recent market recovery has led to a profitable outcome for the nation’s cryptocurrency endeavor.
Adoption of Bitcoin and Future Plans
El Salvador has been a pioneer in cryptocurrency adoption, becoming the first country in 2021 to recognize Bitcoin as legal tender. This move, however, received criticism from international bodies like the International Monetary Fund, which highlighted the potential risks associated with such a decision. Despite these warnings, the risks have not materialized significantly, mainly due to the limited adoption of Bitcoin within El Salvador.
The practicality of using Bitcoin for everyday transactions in El Salvador has been under scrutiny. A report by a Cointelegraph journalist in December revealed challenges in utilizing Bitcoin for routine services. Nonetheless, El Salvador is taking steps to foster a Bitcoin-friendly environment. The government plans to introduce Bitcoin education in state-run schools by next year, signaling a continued commitment to integrating cryptocurrency into the nation’s economic framework.