El Salvador, under the leadership of President Nayib Bukele, continues to defy global financial norms by aggressively expanding its Bitcoin (BTC) holdings. This move persists even after finalizing a $1.4 billion agreement with the International Monetary Fund (IMF), which includes recommendations to reduce exposure to the volatile cryptocurrency. The country’s unshaken faith in Bitcoin not only underscores Bukele’s economic vision but also highlights the global tension between traditional financial institutions and decentralized digital assets.
As of 2025, El Salvador holds 6,135 BTC—worth approximately $567 million—and continues to accumulate more on a near-daily basis. The decision to continue these purchases, despite explicit IMF guidance to the contrary, reflects a complex balance between sovereignty, financial innovation, and economic pragmatism.
This article explores the economic, political, and geopolitical dimensions of El Salvador’s continued BTC accumulation in the face of multilateral pressure, and assesses whether this bold strategy could redefine financial independence for developing nations—or lead to economic vulnerability.
Background: Bitcoin Becomes Legal Tender
El Salvador shocked the world in September 2021 by becoming the first country to recognize Bitcoin as legal tender alongside the U.S. dollar. President Bukele framed the initiative as a way to promote financial inclusion, attract crypto investment, and reduce remittance costs for Salvadorans abroad.
Since then, the government has launched a range of Bitcoin-focused programs, including:
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Chivo Wallet: A government-backed Bitcoin wallet offering bonuses to encourage usage.
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Volcano Bonds: Bitcoin-backed sovereign debt aimed at financing a “Bitcoin City” powered by geothermal energy.
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ONBTC: The National Bitcoin Office, a government unit focused on strategy, mining, and international BTC relations.
Despite early volatility and skepticism, Bukele’s administration has maintained its commitment to Bitcoin—an approach now at odds with its agreement with the IMF.
The IMF Agreement: $1.4 Billion in Exchange for Reforms
In March 2025, El Salvador finalized a long-awaited $1.4 billion deal with the International Monetary Fund. The agreement includes provisions for fiscal discipline, debt sustainability, and financial transparency—critical areas for a country struggling with budget deficits and high public debt.
However, one of the more controversial recommendations in the agreement involves Bitcoin:
“The Government of El Salvador is advised to reduce exposure to crypto-assets, including curtailing direct Bitcoin purchases and reviewing the legal tender status to mitigate fiscal and financial risks.” — IMF Article IV Consultation, 2025
The IMF’s concern is not unfounded. Bitcoin’s volatility presents risks to balance sheets, especially when public funds are involved. Moreover, adopting a non-sovereign asset as legal tender could complicate monetary policy, regulatory oversight, and foreign debt negotiations.
Despite these cautions, President Bukele has not only rejected calls to scale back—he has accelerated Bitcoin purchases.
The Government’s Response: Full Speed Ahead
El Salvador’s Economy Minister María Luisa Hayem Brevé confirmed in a recent statement that President Bukele remains committed to the national Bitcoin strategy. “Bitcoin is not a short-term experiment for El Salvador,” she said. “It is a long-term policy, integrated into our economic development plan.”
The ONBTC (Oficina Nacional de Bitcoin de El Salvador) continues to announce new acquisitions, frequently updating the country’s Bitcoin wallet address for public transparency. These purchases have persisted even during market corrections, suggesting that the government views the strategy as cost-averaging rather than speculation.
Recent reports indicate:
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El Salvador buys 1 BTC per day as part of its “DCA strategy” (Dollar-Cost Averaging).
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A dedicated cold storage wallet now holds over 6,135 BTC.
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The government is considering expanding Bitcoin mining via volcanic geothermal energy.
Economic Rationale Behind Bitcoin Accumulation
1. Financial Inclusion
Approximately 70% of Salvadorans were unbanked before Bitcoin adoption. By promoting Bitcoin use and wallets like Chivo, the government has aimed to connect citizens to digital finance and reduce dependency on costly traditional banking.
2. Lowering Remittance Costs
Remittances make up over 20% of El Salvador’s GDP. Traditional services like Western Union charge high fees. Bitcoin-based remittance systems could drastically cut costs and increase speed, giving Salvadoran families more value for each dollar sent home.
3. Tourism and Investment Appeal
Since Bitcoin’s legalization, El Salvador has become a destination for “crypto nomads” and digital entrepreneurs. Bitcoin conferences, international interest, and rising crypto tourism have injected foreign capital into local businesses.
4. Strategic Reserves
Bukele views Bitcoin as a digital gold and a long-term hedge against inflation and devaluation. By accumulating Bitcoin gradually, El Salvador aims to build a sovereign wealth reserve independent of fiat currencies and external debt dynamics.
Risks and Challenges
While the BTC-first strategy has garnered global attention, it comes with significant risks—both domestically and internationally.
1. Price Volatility
Bitcoin’s value can fluctuate by double-digit percentages within weeks. During bear markets, the value of El Salvador’s holdings has dipped by over 50%. This volatility puts pressure on the public budget and invites criticism from opposition parties and global observers.
2. Lack of Diversification
Tying a portion of national reserves to a single volatile asset limits financial flexibility. Critics argue that El Salvador should diversify investments instead of committing heavily to Bitcoin.
3. Strained Relations with Creditors
The IMF and World Bank have both expressed discomfort with El Salvador’s Bitcoin policies. The IMF, in particular, has warned that excessive crypto exposure could impair access to future funding and credit.
4. Limited Adoption by Citizens
Despite government promotion, local BTC usage remains limited. Most citizens still prefer the U.S. dollar for daily transactions due to Bitcoin’s complexity, volatility, and internet access requirements.
International Reactions
IMF’s Persistent Warnings
Since 2021, the IMF has issued multiple warnings to El Salvador regarding Bitcoin. In its most recent 2025 Article IV review, the IMF emphasized the need for “prudent fiscal and monetary policies” and suggested that Bitcoin adoption be reconsidered to ensure macroeconomic stability.
Despite these advisories, the IMF stopped short of making Bitcoin rollback a formal condition of its $1.4 billion agreement—possibly a concession to El Salvador’s sovereignty.
United States and Other Global Powers
The U.S. government has remained neutral but observant. While some legislators view Bukele’s Bitcoin push as risky, others acknowledge that sovereign adoption of decentralized currencies is inevitable.
Global crypto advocates, including leaders from countries exploring CBDCs (Central Bank Digital Currencies), are watching El Salvador closely as a case study in national-level crypto integration.
What Makes El Salvador’s Bitcoin Strategy Unique?
1. Legal Tender Status
No other country has recognized Bitcoin as official legal tender alongside fiat currency. This puts El Salvador at the forefront of monetary innovation, for better or worse.
2. Government-Led Accumulation
Most countries that hold Bitcoin—such as the U.S. or Germany—do so through asset seizures or mining. El Salvador is unique in using public funds to buy Bitcoin proactively, on a planned daily basis.
3. Integration with National Projects
Bitcoin is embedded in broader national projects, from geothermal mining to the planned Bitcoin City. These integrations show a long-term vision rather than a temporary investment fad.
The Future of Bitcoin in El Salvador
As of 2025, El Salvador stands at a crossroads. With IMF funding secured, but Bitcoin policies unchanged, the country must now balance innovation with financial stability. The government’s Bitcoin roadmap includes:
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Expansion of geothermal mining facilities to support eco-friendly Bitcoin mining.
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Development of Bitcoin City, a tax-free tech hub powered entirely by volcanic energy.
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Continued BTC purchases, with Bukele reaffirming the 1 BTC/day strategy.
The long-term success of this strategy hinges on several factors:
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Bitcoin Market Performance: A strong bull cycle could validate Bukele’s bet. A prolonged downturn could stress public finances.
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Global Regulatory Trends: If more countries adopt or regulate Bitcoin favorably, El Salvador’s early entry could pay off.
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IMF Cooperation: Maintaining good faith with global financial institutions while pursuing crypto independence will require diplomatic finesse.
Final Thoughts
El Salvador’s unwavering Bitcoin strategy is one of the boldest financial experiments of the 21st century. By continuing its daily Bitcoin accumulation despite a $1.4 billion IMF deal advising otherwise, the country is challenging the conventions of global finance and testing the limits of economic sovereignty.
Critics see a dangerous gamble. Supporters see visionary leadership. Either way, El Salvador’s path will serve as a case study in how small nations can harness—or be humbled by—cryptocurrency.
As Bitcoin adoption spreads and monetary paradigms shift, the world will continue watching this Central American nation’s digital journey—block by block, and Bitcoin by Bitcoin.
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