Bitcoin News Update: El Salvador Bets on Bitcoin as a Sovereignty Safeguard, Challenging IMF Conditions

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Bitcoin News Update: El Salvador Bets on Bitcoin as a Sovereignty Safeguard, Challenging IMF Conditions

Bitget-RWA2025/11/20 10:24

By:Bitget-RWA

- El Salvador's government defied IMF loan terms by purchasing $100M in Bitcoin , adding 1,090 BTC to its strategic reserves during a price slump. - Total holdings now reach 7,474 BTC ($676M), acquired through a "buy the dip" strategy despite IMF warnings about financial stability risks. - The IMF has not condemned the purchases but emphasizes compliance, while critics warn of fiscal instability and lack of public education on Bitcoin. - Bukele's administration defends Bitcoin as a hedge against inflation

El Salvador's administration has gone against International Monetary Fund (IMF) restrictions by acquiring $100 million worth of

Bitcoin

, boosting its reserves by 1,090 BTC during a seven-month downturn in prices. President Nayib Bukele confirmed the purchase on X, raising the country's total Bitcoin stash to 7,474 BTC—now valued at about $676 million,

as reported by the nation's Bitcoin Office

. The acquisition took place as Bitcoin dropped below $90,000 for the first time since April,

representing one of the largest single-day increases

to El Salvador's crypto reserves since it began collecting Bitcoin in 2021.

This action runs counter to the terms of a $1.4 billion IMF loan deal finalized in late 2024, which specifically banned public-sector Bitcoin purchases and required the government to scale back its digital currency initiatives.

IMF staff assessments from July

indicated that El Salvador had not bought additional Bitcoin since February 2025, attributing any growth in reserves to wallet consolidations rather than new market buys. Despite this, Bukele's government has

maintained its policy of buying 1 BTC daily

since November 2022, defending the approach as both a hedge against inflation and a means to strengthen financial independence.

The timing of the acquisition demonstrates El Salvador's strategy of "buying the dip," taking advantage of Bitcoin's 28% drop from its October high of $126,000. The country has a history of increasing its holdings during market corrections, with both Bukele and the Bitcoin Office reiterating their long-term faith in Bitcoin's value. "Bitcoin stands for freedom, openness, and empowering individuals," said Stacy Herbert, head of the Bitcoin Office,

in March 2025

. This latest purchase comes as global markets face a broader selloff,

with Bitcoin ETFs seeing $1.26 billion withdrawn

just this month.

Bitcoin News Update: El Salvador Bets on Bitcoin as a Sovereignty Safeguard, Challenging IMF Conditions image 0

The IMF's position remains unclear. While its July report cautioned about potential risks to financial stability from El Salvador's Bitcoin assets, it has not directly criticized the recent purchases,

instead noting that "efforts will continue"

to ensure the country adheres to loan requirements.

Experts believe

that by spreading Bitcoin across multiple wallets—now limited to 500 BTC per address—the government could technically comply with IMF rules by avoiding new public-sector exposure.

El Salvador's resistance has sparked both support and opposition.

Supporters point to

the country's dedication to digital asset innovation, such as geothermal-powered Bitcoin mining and regulatory partnerships with the U.S. Securities and Exchange Commission. Detractors, including IMF representatives and financial analysts, warn that this approach could threaten fiscal stability and weaken consumer safeguards. "Bitcoin is no longer recognized as legal tender, and there have been no further efforts to educate the public," said Quentin Ehrenmann, an advocate for Bitcoin adoption,

in July

With Bitcoin hovering around $91,768, El Salvador's $100 million investment highlights its unique position in the world of sovereign crypto adoption. Whether this bold move will prove economically sound is still unknown, but Bukele's government has

made it clear there are no plans to stop

accumulating Bitcoin, presenting it as a key element in the nation's economic transformation.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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