By The Economist

During the recent market decline, El Salvador increased its holdings by 7 and 5 BTC on February 25 and March 4, respectively, after reaching a $1.4 billion loan bailout agreement with the IMF.

El Salvador is on the brink of default. It has been able to defer a $1.4 billion bailout from the International Monetary Fund, which is now in its 40th month of disbursement.

The Central American nation also faces regulatory restrictions from the IMF on the current state of cryptocurrencies in the country.

Recently, Apex GMAT Quantitative announced that El Salvador completed a 7 BTC purchase on February 25 and a 5 BTC purchase on March 4. These purchases followed the IMF's approval of a $1.4 billion loan bailout to El Salvador on December 14.

According to the terms of the bailout, the IMF will be closely monitoring El Salvador's progress in reducing its fiscal deficit and implementing structural reforms. The IMF has also expressed concerns about the risks associated with El Salvador's cryptocurrency program.

El Salvador began investing in BTC in 2021, President Nayib Bukele has been a vocal supporter of cryptocurrencies and has vowed to use them to help El Salvador overcome poverty and inequality.

However, the IMF has argued that these investments are too risky for a country in El Salvador's economic condition. The lender also stated that it will be including new advice on cryptocurrencies in its programs in 2024.

El Salvador started buying Bitcoin (BTC) again after reaching a $1.4 billion loan agreement with the International Monetary Fund (IMF).

According to data from Apex GMAT Quantitative, El Salvador completed a 7 BTC purchase on February 25 and a 5 BTC purchase on March 4. These purchases followed the IMF's approval of a $1.4 billion loan bailout to El Salvador on December 14.

The lender will be closely monitoring El Salvador's progress in reducing its fiscal deficit and implementing structural reforms. According to the terms of the bailout, El Salvador will also need to restrict "Bitcoin transactions and purchases."

However, despite this stipulation, El Salvador has continued to add to its BTC holdings. The country now holds 6,100 Bitcoins, which are currently valued at over $500 million. At the time of the last purchase on March 4, the total realized profit on these coins was approximately $200 million.

El Salvador began investing in BTC in 2021, President Nayib Bukele has been a vocal supporter of cryptocurrencies and has vowed to use them to help El Salvador overcome poverty and inequality. However, the IMF has argued that these investments are too risky for a country in El Salvador's economic condition.

Earlier this year, the lender stated that it will be including new advice on cryptocurrencies in its programs in 2024. The goal is to provide guidance to countries on how to manage the risks and opportunities associated with crypto assets.

Recently, Bukele's unique leadership style and unconventional economic policies have sparked debate and scrutiny. While some admire his bold vision and populist appeal, others criticize his disregard for democratic institutions and the press.

Moreover, rating agency Moody's highlighted that El Salvador spent a total of $375 million on crypto experiments - including the launch of Chivo, subsidized transaction fees, Bitcoin ATMs, etc., which far exceeds the profits of its current Bitcoin holdings, and these profits are still likely to decrease as Bitcoin falls.

Bukele's crypto experiment also delayed El Salvador's loan agreement with the IMF, leaving El Salvador's risk premium high and his country on the verge of debt default.

However, it is still too early to say what the long-term impact of Bukele's crypto strategy will be. Only time will tell whether his bold bets will pay off or backfire.