Bitcoin's Historic Surge
As bitcoin achieved unprecedented heights—surpassing the $100,000 milestone—El Salvador's President Nayib Bukele celebrated his bold gamble on the cryptocurrency. The government’s investment, initially met with skepticism, now boasts a valuation exceeding **$600 million**.
Key Drivers of Bitcoin's Rally
- Political Shifts: Bitcoin’s rally accelerated following Donald Trump’s election victory, fueled by market optimism about crypto-friendly policies.
- Regulatory Appointments: Trump’s nomination of cryptocurrency advocate Paul Atkins as SEC chair further boosted investor confidence.
El Salvador's Bitcoin Experiment
Adoption Challenges
Despite being legal tender since 2021, bitcoin adoption lagged behind Bukele’s vision. The government incentivized usage with $30 bitcoin grants for digital wallet sign-ups, but most recipients quickly liquidated their holdings.
Opposition and Public Sentiment
Bukele criticized political opponents for dissuading citizens from embracing bitcoin, calling it a "resounding error" that cost many potential gains.
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Expert Perspectives
Unrealized Gains
Former Central Bank President Carlos Acevedo noted the unrealized nature of the government’s profits until bitcoin is sold. He acknowledged Bukele’s strategic timing, especially amid Trump’s pro-market stance.
Volatility Warnings
Acevedo emphasized bitcoin’s inherent volatility, cautioning that "the average Salvadoran doesn’t use bitcoin," with only a small affluent minority actively investing.
Voices from the Ground
- Esteban Escamilla (Clothing Store Worker): "I cashed out my $30 bitcoin in 2021—now I see its value skyrocketed."
- Josefa Torres (Shopper): "I used the bitcoin for household expenses. Investing isn’t an option for me."
IMF's Cautious Stance
The International Monetary Fund urged greater transparency to mitigate fiscal risks tied to El Salvador’s bitcoin holdings, though major risks remain unmaterialized.
FAQ
Why did bitcoin surge past $100,000?
The rally was driven by post-election optimism and expectations of crypto-friendly SEC policies under Trump’s administration.
How profitable is El Salvador’s bitcoin investment?
The government’s holdings are now valued at $600+ million, though profits are unrealized until sold.
Do Salvadorans widely use bitcoin?
No. Adoption is limited, with most citizens cashing out grants due to lack of funds or trust.