El Salvador Resumes Bitcoin Purchases, Reaffirming Commitment Despite IMF Agreement and Market Volatility
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El Salvador has resumed its Bitcoin purchasing strategy, acquiring 7 BTC after a week-long pause, which raised concerns among Bitcoin investors. The country’s Bitcoin Office confirmed the purchase, reinforcing President Nayib Bukele’s commitment to increasing Bitcoin reserves despite regulatory modifications linked to an International Monetary Fund (IMF) agreement.
Bukele Reaffirms Bitcoin Commitment
The recent purchase dispelled rumors that El Salvador might be halting Bitcoin acquisitions. President Bukele, known for his pro-Bitcoin stance, emphasized that the country would continue adding to its Bitcoin holdings. His decision comes in light of an IMF-backed $1.4 billion credit facility that required amendments to the Bitcoin law, making Bitcoin acceptance optional for private businesses.
Despite these changes, the country’s Bitcoin reserves now stand at 6,088 BTC, valued at approximately $560 million. Even with the temporary pause, El Salvador managed to acquire 41 BTC over the last month, surpassing its “one Bitcoin a day” goal set in November 2022.
Regulatory Changes and IMF Agreement
The halt in purchases coincided with El Salvador’s 40-month Extended Fund Facility (EFF) agreement with the IMF, which involved structural adjustments, including Bitcoin-related regulations. The revised Bitcoin law now permits businesses to opt out of Bitcoin transactions while still requiring them to clear transactions in the national currency.
However, the government remains committed to Bitcoin investment, evident from prior acquisitions, including an $11 million purchase in February. Additionally, in March 2024, Bukele transferred El Salvador’s Bitcoin reserves to cold storage, securing over $400 million worth of assets.
Market Reactions and Bitcoin’s Price Volatility
El Salvador’s Bitcoin strategy has consistently influenced market sentiment. The latest purchase follows a Bitcoin price dip below $95,000, triggered by U.S. President Donald Trump’s tariff announcements. This decline led to $950 million in liquidations across cryptocurrency markets, with Bitcoin currently trading at around $91,000, down 4% in the past 24 hours.
Despite criticism from figures like economist Peter Schiff, who questioned Bitcoin’s viability as a medium of exchange, El Salvador continues to push forward with its Bitcoin agenda. The country initially adopted Bitcoin as legal tender in September 2021, though usage among Salvadorans remains limited.
El Salvador’s ongoing Bitcoin acquisitions highlight its long-term vision for cryptocurrency, signaling that despite regulatory shifts, the nation remains a key player in Bitcoin adoption on a national scale.
