El Salvador’s bold decision to embrace Bitcoin as legal tender seems to be paying off. Following a recent surge in Bitcoin’s price, the Central American nation is now sitting on a healthy $85 million profit, according to the Nayib Tracker website.
President Nayib Bukele’s strategy of buying Bitcoin for the country’s treasury involved calculated risk. El Salvador began its purchases in September 2021, when Bitcoin was trading at a then-high of $51,769. Critics questioned the move when the price plummeted to $16,000 during the subsequent bear market, putting the portfolio significantly underwater.
However, Bitcoin’s recent rally has proven Bukele’s strategy might be working. The price crossed the $42,600 average cost of El Salvador’s purchases in February, erasing previous losses. Now, with Bitcoin exceeding $72,000, the country boasts a substantial profit. Their current Bitcoin holdings, totaling 2,861 coins, are valued at over $207 million.
President Bukele, on March 12th, highlighted additional sources of income beyond just price appreciation. These include revenue generated from:
- The country’s Bitcoin-based citizenship program.
- Converting Bitcoin to US dollars for local businesses.
- Bitcoin mining through a partnership with Volcano Energy and Luxor Technology.
Some, like venture capitalist Tim Draper, believe El Salvador’s Bitcoin strategy could propel them towards financial independence. If Bitcoin reaches $100,000, Draper suggests, the country might even be able to pay off its debts to the International Monetary Fund (IMF).
Bukele has faced significant media scrutiny for his Bitcoin strategy. He recently criticized media outlets for focusing heavily on supposed losses during the market downturn.
El Salvador’s Bitcoin experiment is still unfolding. While the recent price surge is positive, the long-term viability of this strategy remains to be seen.
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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
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