El Salvador, the first country to adopt Bitcoin as legal tender in 2021, has reached a major financial milestone. Thanks to the recent boom in Bitcoin’s value, the nation is racking up $100 million in unrealized profits, equivalent to a 20% profit margin on its reserves.
Faced with the achievement, President Nayib Bukele did not hesitate to pronounce “I told you so” in X, a reminder of his confidence in the Cryptocurrency despite the initial criticism.
Bitcoin accumulation in El Salvador
Since El Salvador made its first Bitcoin purchase in 2021, the country has continued to acquire the leading cryptocurrency. Over the past two years, he has purchased Bitcoin in several transactions and, since 2022, has implemented a daily acquisition strategy following the FTX collapse.
This approach allowed the country to acquire BTC at low prices, which has boosted the value of its reserves as the price of the cryptocurrency touched $90,000.
El Salvador’s Bitcoin portfolio is close to $500 million. Source: nayibtracker.com
Long-term bet and challenges
Bukele’s strategy has not been immune to controversy. In 2022, organizations such as the International Monetary Fund (IMF) and media such as Bloomberg questioned the viability of the experiment, considering that it could destabilize the Salvadoran economy. However, two years later, the current results seem to support Bukele’s vision.
It is important to remember that the $100 million is “unrealized gains,” meaning it reflects the current value versus the purchase price. If El Salvador tried to sell all the BTC at once, it could face a ‘slippage’, losing some of the projected profit due to the large amount of assets for sale.
Bitcoin value growth after Trump’s re-election
The recent re-election of Donald Trump in the US, seen as a pro-crypto candidate, has brought new expectations of favorable policies towards cryptocurrencies.
This sentiment has influenced the rise of Bitcoin, which has increased significantly in value since the election. Senator Cynthia Lummis’ proposed plans to stockpile 5% of global Bitcoin supply for a strategic reserve in the US reflect this favorable direction. This pro-crypto push could strengthen global interest in cryptocurrencies.
El Salvador and sustainable Mining
In addition to its BTC purchases, El Salvador has invested in Bitcoin mining projects powered by volcanic energy, cementing its commitment to the cryptocurrency sector. This project, known as “volcano bonds”, seeks to take advantage of the country’s natural resources to promote sustainable mining infrastructure and attract investors from around the world.
Future of the Bitcoin project in El Salvador
With a base of popular support that resulted in Bukele’s re-election, the Salvadoran experiment with Bitcoin continues to be an evolving model that could influence other countries. The recent profit of $100 million reaffirms the country’s commitment to the crypto world and underlines the potential of Bitcoin as a financial alternative at the national level.
Impact on Dogecoin and other cryptocurrencies
Although Bitcoin has dominated the news, other cryptocurrencies such as Dogecoin have also seen a rally following the political change in the US, reaching 2% growth at the start of the day. Global politics and growing support for cryptocurrencies appear to point the way toward an era of mass adoption.
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