El Salvador’s unrealized Bitcoin profits briefly hit $360 million after Bitcoin’s new $106,000 all-time high price. According to a screenshot shared by President Nayyib Bukele, the country’s investment has now provided double returns. According to the shared portfolio, the government has spent over $270 million purchasing Bitcoin, with its cache now worth about $632 million.
The rise signifies a 128% increase before the asset’s price dropped to $104,000. Despite the drop, the country remains with significant profits, drumming the success associated with having a Bitcoin reserve. The country currently holds 5,966 BTC, buying one per day after Bukele declared the initiative in November 2022. Arkham Intelligence data puts its last purchase at $103,190 on December 15.
New IMF loan threatens BTC’s legal tender status in El Salvador
With El Salvador already neck deep in its Bitcoin reserve strategy, the country has done little to convince international organizations. The asset’s status as a legal tender, which was passed into law in September 2021, in the country might soon change. A Financial Times report mentioned that the country is looking to secure a $1.3 billion loan from the International Monetary Fund (IMF), with one of its clauses threatening Bitcoin’s status in the country..The report revealed that the IMF is adding it as a condition for El Salvador to remove the mandatory legal tender status on Bitcoin. The organization wants businesses and individuals to decide if they want to accept the asset or not, making it optional. This means that the clause could hinder the country’s Bitcoin adoption clause.
However, experts have said that the effects may be considerably low because people have not been too open to accepting Bitcoin as legal tender. A survey in 2022 revealed that only a fraction of the businesses in El Salvador accept Bitcoin, with even a tinier fraction of individuals willing to use it as a means of payment. Still, the organization’s skepticism is not a surprise. The organization has always preached about the effects of using BTC as a legal tender, noting that its cons outweigh its pros.
The organization listed several negative factors, including its use for criminal activities, price volatility, and financial instability. However, the wide perception of the public about BTC has changed since then, with corporations adopting the asset. El Salvador’s bonds have also benefited, with their values increasing drastically. Despite that, the IMF has not stopped its continued probe into the country’s Bitcoin policy, asking for transparency.
Countries are leaning towards a Bitcoin reserve plan
With the rise in Bitcoin adoption among firms, there have been talks of countries creating their own Bitcoin reserve plans. In the United States, President-elect Donald Trump has promised to look into the creation of a Bitcoin reserve, with faithful urging him on and skeptics showing displeasure.
He spoke about it recently at the NYSE, where he said the United States needs to do something big with Bitcoin. Similarly, Florida and Pennsylvania have already submitted proposals for Bitcoin reserves, with states like Wisconsin and Michigan also showing keen interest. Other countries are also looking into the idea.
South Asian country Bhutan is one faithful supporter of the asset, boasting over $1 billion in Bitcoin holdings through mining contracts. Russia and Thailand are a few of the others considering the plan. Meanwhile, demand for Bitcoin exchange-traded funds (ETFs) is also on the rise, with institutional players steadily buying. Analysts have revealed that all these factors could see Bitcoin hit close to seven figures soon.
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