El Salvador Bitcoin Treasury Exceeds Initial Estimates

[TL; DR]

On 14 March El Salvador President Nayib Bukele announced that the country has 5,689 Bitcoin.

El Salvador will continue to acquire bitcoin using the dollar average costing strategy.

President Bukele’s declaration of the country’s bitcoin holdings has increased transparency and accountability.

Introduction

El Salvador continues to hog the light within the bitcoin sector after it has taken a transparent route of divulging its BTC holdings to the public. Therefore, the entire world, not only the Salvadorans, can track the country’s progress in acquiring the coin. Of course, this may inspire many countries and individuals to take bitcoin seriously.

This article covers the crypto news related to El Salvador bitcoin journey from its declaration of the coin as a legal tender to its citizenship program as well as its recent BTC acquisitions. We will also assess possible implications of the country’s public declaration of its bitcoin holdings.

Unexpected Size of El Salvador’s Bitcoin Treasury

On 14 March Nayib Bukele, the El Salvador President, announced that the country had moved bitcoin worth over $400 million into a cold wallet, a pivotal development for the country’s treasury. The transfer of BTC to a cold wallet has showcased the country’s commitment to making the coin an important part of its financial strategy.

President Bukele used a screenshot to publicize the country’s BTC treasury growth. The following image shows that the country has 5,689 bitcoin, worth over $406 million at the time of posting.

Source: x.com

President Bukele’s statement that “You can call it our first Bitcoin piggy bank,” indicates the country’s intention to increase its BTC investment value. Based on the image above and the total value of the bitcoin it shows that when El Salvador moved its BTC to the cold wallet its price was close to $71,463.

Read also: El Salvador Launches Tether Visa Program

Also, the indication is that the first batch of bitcoin was moved on 12 March. Before President Bukele’s recent pronouncement of the country’s crypto holdings one of the commonest El Salvador BTC Treasury estimates was that the country had 2,848 Bitcoin, worth about $173 million by mid-March.

On-chain data shows that El Salvador’s bitcoin were routed through Bitfinex, a Hong Kong-based crypto exchange. Commenting on El Salvador’s bitcoin narrative Lina Seiche said, “The one main difference between El Salvador & any other country I’ve seen is Optimism. There’s optimism here. People are looking into the future with hope, with plans, with visions… this country has regained its collective identity.”

El Salvador Pioneering Move to adopt Bitcoin as Legal Tender

El Salvador made history in 2021 due to its BTC adoption as a legal tender. Its main aim has been to promote financial inclusion, diversity, job creation and international remittances. To encourage its citizens to invest in bitcoin the country launched its digital wallet, Chivo Wallet, an app that enhances the accessibility of the coin and promotes peer-to-peer crypto payments.

The country also started bitcoin mining operations, powered by geothermal energy from a volcano, a sustainable source of electricity. The country issued Bitcoin volcano bonds to raise funds for that big project.

Although many bitcoiners have hailed President Bukele for El Salvador’s cryptocurrency investment several critics have emerged over the years. For example, the International Monetary Fund (IMF) has been its greatest critic and has urged the country to discontinue its bitcoin project under the pretext that bitcoin can destabilize its economy due to its highly volatile nature.

Of course, it is evident that bitcoin is very volatile. For example, on 14 March it attained a new all-time high of $73,737.94. Nonetheless, 7 days later the price of bitcoin had fallen by 12.3% to trade at $64,653.54. The following diagram shows its recent price trajectory.

Bitcoin 7-Day Price Chart – CoinGecko

As you note from the Bitcoin price chart above, its price has been dropping gradually since 16 March. For example, on 20 March the BTC price plummeted to $61,509 before it rebounded to its current level. However, such strong BTC price fluctuations have not deterred El Salvador from acquiring more coins.

As a fact, El Salvador has several ways in which it increases its bitcoin holdings. Apart from the direct purchase of BTC it also mines them and sells passports. Historically, the country first purchased bitcoin in September 2021 at a price of $52,000.

A year later, in November 2022 President Bukele announced that his government would acquire bitcoin using the dollar-cost averaging (DCA) strategy. As part of the government’s pro-crypto policy President Bukele promised to buy one bitcoin per day.

Posting on X President Bukele said, “The 1 Bitcoin a day program just deposited today’s Bitcoin. This continues until Bitcoin becomes unaffordable with fiat currencies.” This is in sync with what he announced in November 2022 as the next image shows.

Source: x.com

Significance of El Salvador’s Larger Bitcoin Holdings

El Salvador has made a bold declaration of intent to increase its bitcoin holdings. Its commitment to following that path was evident since the first day the country declared bitcoin legal tender, something that has increased crypto adoption among its citizens.

There are a number of BTC investment implications arising from El Salvador’s more than 5,000 bitcoin holding. First, this indicates the government’s innovative approach to bolster its financial reserves and support the economy. This is because the adoption of bitcoin as a legal tender has opened new opportunities for the country to earn revenue. For example, the country is now mining BTC and selling passports.

We have already witnessed that soon after President Bukele declared the nation’s bitcoin holdings several well-wishers donated BTC to the country, thereby increasing its financial inflows. This also indicates how easy it is for individuals and corporations to contribute towards the country’s fiscus without facing complicated procedures and high costs when they use bitcoin.

Similarly, the adoption of bitcoin as a legal tender is likely to attract investment in the blockchain sector and positions the country as a cryptocurrency hub. It also indicates that the country is on track to build its Bitcoin City, envisioned during the first days of the adoption of BTC as a legal tender.

The country’s current successful story in using bitcoin shows that the realm of cryptocurrency is not a passing fad and may entice other nations to include bitcoin in their treasuries.

Conclusion

On 14 March El Salvador President, Nayib Bukele, divulged that the country holds more than 5,000 bitcoin. Already, it has transferred much of the coin to its cold wallet for safe keeping. The disclosure of the country’s bitcoin holdings has enhanced transparency and showed accountability towards the citizens.

By adopting bitcoin as a legal tender and including it in its treasury the government has shown that it intends to use emerging technologies like the blockchain to transform the nation into a prosperous one.