AFP
El Salvador has continued its Bitcoin acquisitions while the leading cryptocurrency fluctuates below $85,000 amid a wider downturn in the crypto market, despite fears regarding conditions tied to a funding agreement with the International Monetary Fund (IMF) that restricts the Salvadoran government’s BTC transactions.
On Sunday, the Bitcoin Office led by President Nayib Bukele announced the addition of another BTC to its national strategic Bitcoin reserve, raising its total holdings to 6,118.18 Bitcoins, valued at over $512 million.
El Salvador Takes Advantage of Price Decline
The current BTC acquisition by the Central American nation arrives as Bitcoin prices struggle to surpass the $85,000 threshold.
The world’s largest cryptocurrency by market capitalization even dipped to around $82,000 briefly on Sunday before stabilizing just above $83,000 later that night.
Since reaching the $2 trillion mark alongside tech giants Google and Amazon earlier in December with a peak of over $100,000, Bitcoin has lost approximately $400 billion from its market cap.
For many, this downturn presents significant losses; however, for others, including El Salvador, it presents a chance to accumulate more when prices are favorable.
Can El Salvador Maintain Its Purchases Amid IMF Agreement?
The IMF announced earlier this month that it had approved a $1.4 billion funding package for El Salvador to assist the government with its reform initiatives.
As per the terms of the agreement, El Salvador is expected to refrain from making Bitcoin purchases during the duration of the funding program, including winding down its e-wallet Chivo among other concessions required from the Bukele administration.
John Dennehy, founder of the El Salvador-based BTC education initiative My First Bitcoin (Mi Primer Bitcoin), criticized the Bukele administration for “contradicting itself” regarding its Bitcoin approach.
He pointed out the IMF’s recent publication indicates that the Salvadoran government has proposed it will “no longer accumulate new Bitcoins in our portfolio” to secure the loan.
“The El Salvador government is presenting conflicting statements—asserting they will cease accumulating Bitcoin while also stating they are ‘not stopping.’ It is impossible for both claims to be accurate,” he contended.
Bukele’s administration has yet to respond to the concerns surrounding the legality of its Bitcoin acquisitions given its agreements with the IMF.
US Adopts Similar Strategy
While challenges surround El Salvador’s Bitcoin reserve, the United States appears to be taking cues from El Salvador, albeit via a different route and strategy.
U.S. President Donald Trump has signed an executive order to establish a Bitcoin reserve, which, at least initially, will consist solely of BTC seized by the U.S. government, currently estimated at around 200,000 BTC.
Trump’s Bitcoin reserve faces criticism, with some detractors highlighting the inherent volatility of cryptocurrencies.
It remains uncertain if El Salvador will manage to match the United States’ reserve stockpile, but its apparent defiance toward the IMF suggests it may eventually either catch up with or even surpass the American Bitcoin treasury.
