President Bukele’s Post on Bitcoin Holdings of El Salvador Sparks Controversy Amid IMF Deal – What Investors Must Know!

El Salvador President Nayib Bukele recently wrote on X that the country will not stop buying Bitcoin. This post has created controversy as it contradicts the deal El Salvador signed with the International Monetary Fund in December 2024. According to the agreement, the IMF agreed to provide a financial package of $1.4 billion under certain conditions. One of the criteria was that El Salvador must limit its Bitcoin-related activities. But bitcoin holdings of El Salvador have touched 6,100 and are continuing to accumulate!

Why did the IMF put forth this condition? What controversies are the Bukele’s post creating? How is this issue affecting the global crypto market? Let us find answers to these questions! 

What is the Issue? 

El Salvador is the first country in the world to adopt Bitcoin. In 2021, El Salvador legislated the Bitcoin law to make the currency a legal tender in the country. Since then, El Salvador has been making frequent BTC purchases. In recent times, when the BTC prices were hitting low, around $85K, El Salvador dived in to seize the opportunity. It made new BTC purchases, defying its agreement with the International Monetary Fund. This action was the inception point of the issue.

Bitcoin Holdings of El Salvador

As of March 5, 2025, El Salvador holds 6,100 BTC, and the value of these holdings is estimated to be $507 million.

What is the IMF El Salvador Deal?

In December 2024, the International Monetary Fund and El Salvador inked an agreement. According to the agreement signed, the IMF agreed to offer financial support of $1.4 billion. In return, the IMF wanted El Salvador to reduce its Bitcoin-related activities. 

Why is the IMF against El Salvador’s Bitcoin accumulation?

The IMF stands firm in its stance on Bitcoin. According to the IMF, BTC accumulation will cause financial stability risks and affect the country’s fiscal health. Also, the IMF believes that the high volatility of BTC might pose economic instability in the country. The consequences will significantly impact the loan repayment promised under the IMF El Salvador deal.

Why is El Salvador keen on buying BTC?

El Salvador President Nayib Bukele sees Bitcoin as a way to reduce the country’s reliance on international financial organizations like the IMF and World Bank. With the accumulation of BTC, the government strives to establish greater economic independence. 

El Salvador is positioning itself as a BTC-friendly nation to attract crypto investors and tourists. Above all, by probing the history of El Salvador’s currency, it is evident that the country is updating for its economic benefit. Till 2001, the currency of El Salvador was Colon, and its value in the international market was terrible. In 2001, El Salvador adopted the USD as its national currency as it was a top performer. When BTC started outperforming USD, El Salvador adopted BTC! Simple as that!!

Key Takeaways for the Investors

President Bukele’s post is a feast for the crypto market! His announcement reassures that El Salvador remains committed to BTC despite IMF warnings! This message could create a strong bullish momentum, encouraging institutional investors to increase their digital currency holdings. Also, the increasing bitcoin holdings of El Salvador set a precedent for other countries. They may start considering BTC as a part of their reserve. Economically weaker countries will primarily look to El Salvador’s BTC accumulation as a potential alternative. 

While El Salvador’s Bitcoin accumulation creates short-term excitement, the long-term global adoption impact depends on how traditional financial institutions, investors, and governments respond. Bullish or bearish? The market will decide!