El Salvador’s Bitcoin Conviction Now Carries a $300 Million Price Tag
Bitcoin’s (BTC) bear market has weighed closely on buyers throughout the spectrum. Corporate treasuries, main whales, and even nation-state holders have all felt the strain.
The cryptocurrency’s slide has slashed the worth of El Salvador’s holdings as credit score default swaps rise to a five-month high, elevating considerations over the nation’s IMF program and debt outlook.
El Salvador’s Bitcoin Bet Under Pressure as Portfolio Drops
According to the most recent information from El Salvador’s Bitcoin Office, the nation’s Bitcoin reserves stand at 7,560 BTC, worth approximately $503.8 million. Bloomberg reported that the portfolio’s worth has fallen from round $800 million at Bitcoin’s October 2025 peak, marking a drop of almost $300 million in simply 4 months.
Bukele, an ardent Bitcoin advocate, has continued purchasing one Bitcoin per day. However, this technique will increase the nation’s publicity to market volatility.
In distinction, Bhutan not too long ago sold $22.4 million worth of Bitcoin. The divergent methods of El Salvador and Bhutan mirror basically totally different danger philosophies.
Bhutan’s Bitcoin mining operations generated greater than $765 million in revenue since 2019. However, the 2024 Bitcoin halving considerably elevated mining prices, compressing margins and decreasing returns. Bhutan now seems to be liquidating a part of its holdings, whereas El Salvador continues to prioritize long-term accumulation.
Nonetheless, the nation has additionally diversified its portfolio. Last month, it spent $50 million to amass gold as demand for the safe-haven metallic rose amid macroeconomic tensions.
IMF Loan Talks Face Strain Over El Salvador’s Bitcoin Policy
El Salvador’s deepening dedication to cryptocurrency has impacted relations with the International Monetary Fund. The authorities’s continued Bitcoin purchases, mixed with delays in implementing pension reforms, have difficult the nation’s IMF settlement.
The Fund has expressed concern about Bitcoin’s potential impact on fiscal stability. A disruption to the IMF program would weaken one of many key helps behind El Salvador’s sovereign debt restoration. Over the previous three years, the nation’s bonds have returned greater than 130%, making them one of many standout turnaround tales in rising markets.
“The IMF could take problem with disbursements probably getting used so as to add Bitcoin. Bitcoin being down additionally doesn’t assist to ease buyers’ considerations,” Christopher Mejia, an EM sovereign analyst at T Rowe Price, told Bloomberg.
The IMF authorised a 40-month Extended Fund Facility on February 26, 2025, unlocking about $1.4 billion in whole, in line with official IMF documentation. The first evaluate led to June 2025, with $231 million disbursed.
However, the second evaluate has remained on maintain since September, following the federal government’s delay in publishing a pension system evaluation. During that interval, El Salvador continued to add to its Bitcoin reserves despite repeated warnings from the IMF.
A 3rd evaluate is scheduled for March, with every evaluate tied to further mortgage disbursements.
“The continued buy of Bitcoin, in our view, does create some potential challenges for the IMF evaluations. The market would react fairly poorly if the anchor supplied by the IMF had been not current.” Jared Lou, who helps handle the William Blair Emerging Markets Debt Fund, mentioned.
Meanwhile, bond markets are signaling rising concern over El Salvador’s fiscal outlook. Credit default swaps have climbed to a five-month high, reflecting rising investor anxiousness concerning the nation’s reimbursement capability.
According to information compiled by Bloomberg, El Salvador faces $450 million in bond funds this 12 months, with obligations rising to almost $700 million subsequent 12 months.
El Salvador’s Bitcoin coverage now sits alongside key fiscal and IMF negotiations. The final result of upcoming IMF evaluations and the nation’s bond reimbursement schedule will play a important position in shaping investor confidence and the sustainability of its debt trajectory.
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