El Salvador Celebrates 3 Years of Bitcoin Adoption with $31M Profit

September 09, 2024 02:04 PM AEST | By Team Kalkine Media

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El Salvador Celebrates 3 Years of Bitcoin Adoption with $31M Profit — Image source: shutterstock

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El Salvador is marking a significant milestone as it celebrates the third anniversary of its decision to adopt Bitcoin as legal tender. On September 7, 2021, El Salvador became the first country in the world to officially recognize Bitcoin as a legal currency, a move aimed at promoting financial inclusion, enhancing remittance efficiency, and fostering financial innovation.

Despite initial skepticism and criticism, El Salvador has seen notable financial benefits from its {Bitcoin} (BTC) holdings. The country has engaged in a strategy of dollar-cost-averaging, acquiring Bitcoin on a daily basis since its adoption. As of September 7, 2024, El Salvador’s Bitcoin portfolio is valued at over $31 million in profit, with Bitcoin trading at approximately $54,300. The country’s average purchase price for Bitcoin was around $43,877 per unit. El Salvador currently holds a total of 5,865 Bitcoins, worth over $318 million, according to the treasury’s data.

President Nayib Bukele’s decision to adopt Bitcoin faced considerable backlash, particularly as Bitcoin’s value declined from its all-time high following the collapse of the FTX exchange. At its lowest, Bitcoin’s value fell to around $16,000 during the subsequent bear market, leading to significant losses on El Salvador’s Bitcoin holdings at that time. Despite these challenges, the overall performance of the Bitcoin portfolio has turned positive.

The global response to El Salvador’s Bitcoin adoption has been mixed. While the Central African Republic followed suit in April 2022, recognizing Bitcoin as legal tender to support economic growth and financial inclusion, major economies have largely refrained from adopting similar measures. The International Monetary Fund (IMF) has also urged El Salvador to reconsider its Bitcoin strategy. In Brazil, discussions are ongoing regarding the establishment of a legal framework for Bitcoin, though no concrete regulations have yet emerged.

Overall, El Salvador’s experience highlights the complex dynamics of adopting cryptocurrency at a national level, with both significant opportunities and substantial risks.

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