El Salvador’s President Celebrates Bitcoin's Success

President Nayib Bukele of El Salvador is celebrating as the value of bitcoin has soared to new heights, exceeding $100,000 for the first time. This milestone has validated his bold decision to invest in the cryptocurrency as a legal tender in the country since 2021.

Although the adoption of bitcoin in El Salvador has not always matched the president's optimistic outlook, recent events have significantly increased the value of the government’s investment, which now exceeds $600 million. This recent bitcoin rally follows Donald Trump's election victory last month and his intention to appoint Paul Atkins, a supporter of cryptocurrencies, as the chair of the Securities and Exchange Commission.

Just two years prior, bitcoin experienced drastic fluctuations, dropping below $17,000. However, it fell back below the $100,000 mark on Thursday afternoon, trading just above $99,000.

President Bukele expressed his disappointment with the political opposition, attributing the failure of many Salvadorans to capitalize on the bitcoin surge to their resistance. In 2021, when bitcoin became legal tender, it sparked street protests, as people expressed concerns about its implementation.

Historically, El Salvador has relied on the U.S. dollar as its currency, but Bukele believed that incorporating bitcoin would open new financial avenues for the country's unbanked population and reduce costs associated with money transfers for remittances sent by Salvadorans living abroad. As part of the initiative, the government offered $30 in bitcoin to citizens who adopted digital wallets.

While many took part in the offer, most cashed out their bitcoin soon after. Bukele took to social media to emphasize the mistakes made by the opposition, stating that their stance against bitcoin ultimately hurt many in the country.

On social media platform X, Elon Musk commented positively about Bukele's actions regarding cryptocurrency.

Carlos Acevedo, El Salvador’s former Central Bank President, acknowledged the significant increase in bitcoin's value but stressed that it remains unrealized until the government decides to sell its holdings. He praised Bukele's administration for its bitcoin strategy, especially in the context of market trends influenced by the Trump administration.

Acevedo explained that the market's recent enthusiasm stems from expectations of supportive policies for cryptocurrencies under a potential Trump administration. However, he warned of the inherent volatility that comes with cryptocurrencies.

Despite the excitement surrounding bitcoin, Acevedo noted that the average person in El Salvador does not use it. He mentioned that only a small segment of citizens, typically with greater financial resources, has actively invested in bitcoin.

Esteban Escamilla, a shop worker in Santa Tecla, admitted to cashing out the initial $30 of bitcoin offered in 2021, realizing now that holding onto it would have been more beneficial. Another citizen, Josefa Torres, shared that she did not invest in bitcoin either, using her allocated funds for everyday expenses.

In August, after meetings between the International Monetary Fund (IMF) and the Salvadoran government, the IMF acknowledged the risks associated with El Salvador's bitcoin holdings while recognizing that not all potential issues have yet occurred. They suggested that efforts be made to enhance transparency and mitigate potential fiscal and financial stability risks arising from the country's bitcoin project.

Bitcoin, ElSalvador, Economy