El Salvador bitcoin HODLing policy has started to pay dividends as the net worth of BTC held by it rose to $160 million. The small country started a digital asset revolution back in September 2021 when it adopted bitcoin as legal tender. It also decided in principle to store the digital currency as part of the reserves held by its Central Bank.
According to the latest figures from BitcoinTreasuries, the Central American country holds 2,381 BTC. This calculates to just shy of the $160 million valuation.
The move has proved successful in the long term despite glaring concerns during the 2022-2023 bear market, when the premier digital asset dropped a lot in value.
El Salvador’s History of Bitcoin Adoption
El Salvador became the first country in history to declare bitcoin as legal tender back in 2021. This was a groundbreaking revelation from the tiny country as several global monetary organizations like the IMF warned against this move. Rating agencies like Moody’s also predicted that the country’s financial ratings would be affected by this major declaration.
Previously, several other countries had come close to adopting digital currencies but their approach proved to be faulty. Venezuela under President Nicholas Maduro announced an ambitious “Petro cryptocurrency” project which was supposedly backed by oil barrels. However, it failed to gain traction and was ultimately canceled.
Marshall Islands, a small Pacific Ocean country wanted to shift to a digital currency to break free of the US Dollar’s dominance but couldn’t make it happen. None of them considered the bold move to declare BTC as legal tender and take it from there.
However, under the leadership of President Nayib Bukele, the country decided to go through with this major move. The El Salvadoran government also started to buy and store BTC as a reserve currency in the 3rd quarter of 2021 and was able to keep it up till July 2022. BitcoinTreasuries hasn’t been able to locate further changes to the state’s bitcoin portfolio since then.
Opposition and Teething Problems
All eyes were on El Salvador two years ago as it decided to adopt Bitcoin in parallel with its native fiat currency. It developed a new wallet application called Chivo from scratch to help with pay digital asset payments across the country.
Initially, the country faced a range of teething problems as the app crashed several times in the initial months and its developers had to deal with a lot of bugs. There was also considerable local opposition to President Bukele because his opponents believed it was a distraction technique.
Bukele kept adding bitcoin to the national portfolio and promoted it rigorously on social media. He garnered quite a following across the world for his bold actions. After the digital currency dipped considerably in 2022, it started to rise strongly in the second half of 2023. Now, the small country is sitting on top of $50 million or more in profits. However, Bukele is HODLing and is ruling out any liquidation at the moment.
El Salvador Bitcoin Adoption: The Future
El Salvador’s journey towards adopting bitcoin is swiftly becoming more like a success story. Despite considerable hurdles over the years, the country has been able to benefit from this decision and it has become a useful test case for countries willing to go down this road.
However, the journey has only just begun as the market seems to at the beginning of a bull market. Future decisions of president Bukele remain to be seen, and the bitcoin community is watching events unfold with great anticipation.
