El Salvador Purchases Additional 11 Bitcoin, Total Reserves Reach $650 Million
El Salvador has increased its Bitcoin reserves by purchasing 11 additional BTC on January 20, 2025. This acquisition follows a $1.3 billion loan agreement with the International Monetary Fund (IMF), which advised the country to reduce its Bitcoin investments.
Key Points of El Salvador’s IMF Loan Agreement and Bitcoin Strategy
- The IMF granted a 40-month Extended Fund Facility (EFF) to stabilize the economy and support fiscal reforms.
- The agreement requires the government to limit exposure to Bitcoin and focus on traditional economic measures.
- The IMF raised concerns about financial stability, market volatility, and regulatory uncertainty related to Bitcoin.
- Despite IMF recommendations, El Salvador purchased more Bitcoin shortly after the agreement, increasing its total holdings to $650 million.
Background on El Salvador’s Bitcoin Adoption
- In September 2021, El Salvador became the first country to recognize Bitcoin as legal tender alongside the US dollar.
- The initiative aimed at enhancing financial inclusion and reducing remittance costs.
- The government launched the "Chivo Wallet" and installed Bitcoin ATMs nationwide.
- Challenges include technical issues with the wallet, public skepticism, and price volatility.
- President Nayib Bukele views Bitcoin as a hedge against inflation and a tool for economic empowerment.
Market analysts predict that other countries, such as Argentina, may follow El Salvador's approach. Companies like Bitfarms, Mercado Libre, and Globant in Argentina have reportedly accumulated a combined portfolio of 1,300 BTC, with Bitfarms holding 870 BTC.