El Salvador’s President Celebrates Bitcoin Success

SAN SALVADOR, El Salvador (AP) — With bitcoin reaching a remarkable milestone by exceeding $100,000 for the first time, President Nayib Bukele expressed his triumph on Thursday regarding his substantial investment in the cryptocurrency.

Since becoming legal tender in El Salvador in 2021, bitcoin’s uptake has not entirely aligned with the president’s high hopes. Nevertheless, the government’s bitcoin investment is now valued at over $600 million.

The price surge for bitcoin coincided with the recent election of Donald Trump, who indicated he would appoint Paul Atkins, a supporter of cryptocurrencies, as the chair of the U.S. Securities and Exchange Commission. This news contributed to bitcoin's impressive climb.

It is worth noting that just two years ago, bitcoin struggled, seeing its value dip below $17,000. By Thursday afternoon, however, the price had dropped back under the $100,000 mark, resting slightly above $99,000 by 3 p.m. ET.

Bukele criticized his political opponents, suggesting they played a role in preventing many Salvadorans from capitalizing on the cryptocurrency boom. He highlighted that when bitcoin was declared legal tender in June 2021, there were street protests, although these demonstrations stemmed from various concerns, not solely the bitcoin law.

The tiny nation had traditionally used the U.S. dollar, but Bukele argued that bitcoin could open up new avenues for financial inclusion among the unbanked population while reducing costs related to money transfer services for Salvadorans sending money back home. As an incentive, the government provided $30 in bitcoin to individuals who registered for digital wallets.

While many people participated, they opted to cash out their bitcoin quickly rather than hold onto it. Bukele noted on social media that the opposition's misjudgment concerning bitcoin not only impacted them but also affected many Salvadorans.

On Thursday, Elon Musk complimented Bukele's approach on the platform X. Former Central Bank President Carlos Acevedo acknowledged the gains associated with bitcoin but cautioned that these gains remain unrealized until the government sells its bitcoin. He praised Bukele’s strategy concerning bitcoin in light of Trump’s election, attributing the sustained positive market sentiment to expectations of a supportive regulatory environment from the new administration.

However, Acevedo added that bitcoin's inherent volatility continues to pose risks. He emphasized that the average Salvadoran does not engage with bitcoin, although there is a small segment of wealthier individuals who had invested in cryptocurrencies.

Esteban Escamilla, an employee at a clothing store in Santa Tecla near San Salvador, shared that he quickly withdrew the initial $30 in bitcoin he received in 2021. He remarked, "I don't use bitcoin because I don't have the funds to invest or speculate, but I see that its value has risen significantly."

Josefa Torres, 45, noted while shopping for groceries that she also took out her bitcoin money to cover living expenses, saying, "I don't have any bitcoin now."

After meetings between the International Monetary Fund (IMF) and El Salvador’s government in August, the IMF mentioned the country's bitcoin holdings. They acknowledged that while risks had not fully materialized, more work is necessary to enhance transparency and reduce potential financial risks related to the Bitcoin strategy.

Bitcoin, ElSalvador, Investment