El Salvador Bitcoin Profits Surpass $30 Million
09 Sep, 2024 ● Crypto News
El Salvador is marking the third anniversary of its adoption of Bitcoin as legal tender, a milestone in the country’s financial history.
El Salvador made history on September 7, 2021, by becoming the first country in the world to adopt Bitcoin as legal tender.
The move was aimed at promoting financial inclusion, improving remittance payments, and fostering financial innovation.
President Nayib Bukele's decision positioned the country as a pioneer in digital assets, according to Alex Momot, founder and CEO of Peanut Trade, a market maker specializing in token launch strategy.
In an interview with Cointelegraph, Momot remarked:
“El Salvador’s experiment with Bitcoin can be seen as a success. The country acted as a pioneer, taking risks and trying something radically new. While it’s too early to declare whether all aspects of the reform were successful, it’s clear that El Salvador has reaped some benefits.”
Since 2021, El Salvador has been purchasing Bitcoin on a daily basis as part of its adoption strategy, using a dollar-cost-averaging approach.
As of now, the country’s Bitcoin holdings have generated over $31 million in profit, according to the Nayib Bukele Portfolio Tracker website.
El Salvador bought its Bitcoin at an average price of $43,877 per BTC, and on September 7, Bitcoin was trading at $54,300.
Momot highlighted that El Salvador's $31 million profit demonstrates the economic success of the decision, despite initial skepticism.
He told Cointelegraph:
“This financial gain further strengthens Bukele’s position, as the initiative now appears to be yielding tangible benefits, adding another layer of validation to his bold cryptocurrency experiment.”
El Salvador currently holds 5,865 Bitcoin, valued at over $318 million, according to the country’s treasury website.
While President Bukele's decision faced widespread criticism, particularly after Bitcoin's price dropped from its all-time high of $69,000 in November 2021 following the collapse of the FTX exchange, the country’s holdings were significantly impacted when Bitcoin dipped to as low as $16,000 during the bear market.
Because Bitcoin’s economic model favors early adopters, some crypto investors expected other nations to follow El Salvador’s lead.
However, only one additional country has since adopted Bitcoin as legal tender, while larger economies remain cautious.
In April 2022, the Central African Republic became the second country to legalize Bitcoin as legal tender and allowed the use of cryptocurrencies to stimulate its economy and enhance financial inclusion.
Momot explained that larger economies are unlikely to adopt Bitcoin due to their reliance on international creditors, who generally oppose such moves:
“The bigger the country, the less likely it is to take such risks. This is because larger economies often depend on relationships with international creditors, who are strongly opposed to such moves.”
El Salvador also faced pressure from the International Monetary Fund to reverse its 2021 decision, according to Harshit Gangwar, head of marketing and investor relations at Transak.
Gangwar told Cointelegraph:
“In hindsight, El Salvador was a trailblazer for normalizing Bitcoin as both an everyday currency and as a national investment, and the subsequent institutional adoption in other global regions has vindicated that decision. If El Salvador had left it until today to make Bitcoin legal tender, it’s fair to say there would be much less pushback.”
Brazilian lawmakers have shown interest in establishing a legal framework for Bitcoin adoption, but formal regulations have not yet been developed.
Sources:
https://cointelegraph.com/news/el-salvador-bitcoin-three-years-anniversary
