El Salvador Maintains Steady Bitcoin Acquisition Strategy Amid Market Volatility
El Salvador continues to demonstrate its unwavering commitment to Bitcoin, maintaining its daily purchase strategy despite recent market turbulence. President Nayib Bukele’s administration has been consistently acquiring one Bitcoin per day since November 18, 2022, a policy that remains in effect even as the cryptocurrency market experiences significant fluctuations.
The country’s dedication to this strategy is evident in its cold wallet activity. Since mid-March, when President Bukele transferred El Salvador’s Bitcoin holdings to a publicly disclosed cold wallet, the address has shown a steady accumulation of one Bitcoin per day.
At the time of the transfer, El Salvador’s Bitcoin holdings were reported to be approximately 5,600 BTC, valued at over $400 million. President Bukele referred to this wallet as El Salvador’s “first Bitcoin piggy bank,” marking a significant milestone in the country’s cryptocurrency journey.
El Salvador’s Bitcoin acquisition strategy extends beyond simple purchases. The country has been accumulating Bitcoin through various means, including:
– Passport sales
– Currency conversions
– Mining operations
– Government services
Notably, El Salvador has been leveraging its natural resources for Bitcoin mining. As of May 15, 2024, the country had mined 473.5 Bitcoin using geothermal power from the Tecapa volcano.
In a move to further integrate Bitcoin into its financial system, El Salvador is considering the establishment of a private investment bank. This proposed institution would facilitate transactions in both Bitcoin and US dollars, potentially expanding the country’s cryptocurrency capabilities.
The government initially promoted Bitcoin adoption as a means to increase financial inclusion, particularly for the unbanked population. However, research has shown that the primary users of the government’s Chivo Wallet app were already banked, young, male, and educated individuals.
One of the main goals was to reduce remittance fees, as remittances account for nearly 24% of El Salvador’s GDP. However, data from the Central Bank indicates that only 1.7% of remittances in 2022 were sent via cryptocurrencies, suggesting limited success in this area.
Despite government efforts, public sentiment towards Bitcoin remains largely negative. A poll by the University Institute of Public Opinion found that 70% of Salvadorans believe the Bitcoin law should be repealed.
El Salvador’s Bitcoin investments have been subject to significant market fluctuations. While President Bukele claims no money has been lost, the country’s Bitcoin holdings have experienced substantial value changes due to cryptocurrency market volatility.
El Salvador’s continued commitment to Bitcoin, even in the face of market downturns, underscores its long-term vision for cryptocurrency adoption. As the first country to adopt Bitcoin as legal tender in September 2021, El Salvador remains at the forefront of national-level cryptocurrency integration.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information
