El Salvador Grows Bitcoin Reserves as Global Interest Rises

Jimmy Aki
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Salvador, the world’s first country to adopt Bitcoin as legal tender, has continued its aggressive strategy of accumulating Bitcoin. This was revealed in a recent Arkham data that shows El Salvador has increased its Bitcoin holdings by purchasing one Bitcoin (BTC) daily since March 26, 2024.

El Salvador’s Steady Bitcoin Accumulation

The strategy of acquiring one BTC daily has added 162 Bitcoin to the country’s reserves, bringing its total holdings to 5,851 BTC, valued at approximately $356.4 million at current market prices.

The decision to accumulate Bitcoin aligns with El Salvadoran President Nayib Bukele’s long-term vision of economic independence through cryptocurrency, even as the country considers using Bitcoin to serve its national debt.

The ongoing purchases have been facilitated by transferring 5,689 BTC into a cold storage wallet, a move Bukele referred to as creating the country’s first Bitcoin piggy bank.

El Salvador is not alone in viewing Bitcoin as a valuable reserve asset.

MicroStrategy, a U.S.-based business intelligence firm led by Michael Saylor, has been purchasing Bitcoin aggressively since 2020. As of August 2024, MicroStrategy holds over 226,500 BTC, making it one of the largest institutional Bitcoin holders.

Similarly, the government of Tonga has expressed interest in adopting Bitcoin as a legal tender, inspired by El Salvador’s approach. Tonga’s move signals a growing trend among smaller nations exploring cryptocurrency as a means to achieve economic independence.

In addition to these institutional and governmental investments, the concept of Bitcoin as a reserve asset is gaining traction among some central banks.

The Central African Republic has also moved toward incorporating Bitcoin into its financial system, although progress has been slower than in El Salvador.

Transparency and What It Means for the Future

To address concerns about transparency, the Salvadoran government has implemented a mempool space, allowing for public auditing of its Bitcoin holdings. This initiative aims to build trust and demonstrate accountability in managing public funds linked to cryptocurrency investments.

In addition to its direct Bitcoin purchases, El Salvador has also invested in Bitcoin mining using the country’s abundant geothermal energy.

This approach to Bitcoin mining aligns with Bukele’s vision of integrating technology and natural resources. However, it remains a relatively small part of the country’s broader Bitcoin strategy.

Since 2021 to May 2024, the nation has mined 474 Bitcoin, worth around $29 million.

The future of El Salvador’s Bitcoin experiment remains uncertain, particularly as the cryptocurrency market continues to experience significant volatility.

The current floating profit of approximately $93.45 million, with an average purchase price of around $44,835 per Bitcoin, according to crypto analyst EmberCN- seems to validate Bukele’s strategy in the short term.

However, the long-term success of this approach will depend on the stability of the crypto market and the Salvadoran government’s ability to navigate the risks associated with such a volatile asset.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.