SAN SALVADOR, El Salvador (AP) — On Thursday, El Salvador’s President Nayib Bukele celebrated a significant milestone as bitcoin soared past the $100,000 mark for the first time in history. This surge has put his controversial investment in the cryptocurrency into the spotlight.
Since adopting bitcoin as legal tender in 2021, the uptake among the Salvadoran populace has not matched Bukele’s bold predictions. However, official reports indicate that the government’s investment in bitcoin is now valued at over $600 million, emphasizing a potential profit despite the fluctuating interest among everyday citizens.
The cryptocurrency’s recent upswing has been closely tied to the optimism surrounding former President Donald Trump’s election victory last month. Just hours after Trump announced plans to appoint cryptocurrency supporter Paul Atkins as the next chair of the Securities and Exchange Commission, bitcoin hit its record high on Wednesday night.
It’s worth noting that just two years ago, bitcoin was much less valuable, dipping below $17,000. By Thursday afternoon, the cryptocurrency had experienced a pullback, trading just above $99,000 by 3 p.m. E.T.
Bukele has expressed frustration, attributing the missed opportunities for many Salvadorans to a resistant political opposition. Back when Congress approved bitcoin as legal tender in June 2021, there were street protests against the decision, although the protests had multiple causes, not solely focused on bitcoin.
El Salvador has historically relied on the U.S. dollar, but Bukele promised that embracing bitcoin would open new avenues for the nation’s unbanked population while also streamlining remittance transfers from Salvadorans living abroad. His administration incentivized this transition by offering $30 in bitcoin to those who registered for digital wallets.
While many signed up, most chose to cash out their bitcoin quickly. “It’s critical to highlight that this time, the opposition’s missteps regarding bitcoin have had tangible effects on many people,” Bukele noted on Facebook. He even garnered an “impressive” reaction from Elon Musk on the platform X.
Former Central Bank President Carlos Acevedo remarked on the situation, noting that although the gains from bitcoin are substantial, they remain unrealized until the investment is sold. He credited Bukele’s administration with effectively navigating the bitcoin initiative, especially in the context of the positive market sentiment surrounding Trump’s return to office.
However, Acevedo cautioned that bitcoin remains a volatile asset. “Most Salvadorans do not engage with bitcoin, but there are affluent individuals who have invested in it even prior to the government’s push. Still, they represent a small fraction of the population,” he explained.
Esteban Escamilla, a clothing store worker in Santa Tecla, shared his experience of cashing out the initial $30 of bitcoin. “I don’t invest in bitcoin because I cannot afford to speculate, but I’m aware of its significant increase in value,” he admitted, acknowledging that he would have benefited financially had he retained his investment.
Josefa Torres, 45, mentioned while grocery shopping that she, too, has since withdrawn her bitcoin. “I took out the funds to cover household expenses,” she confessed, illustrating the practical choices many make in the face of economic necessity.
Following discussions between the International Monetary Fund (IMF) and El Salvador’s government in August, the IMF highlighted the country’s bitcoin holdings in their statement. They acknowledged that while numerous risks associated with bitcoin have not yet manifested, there is a consensus on the need for enhanced transparency to mitigate potential financial risks from the bitcoin initiative.
