El Salvador is doubling down on its bitcoin strategy during one of the sharpest selloffs of 2025, adding approximately 1,090 BTC worth $100 million to its national treasury as the cryptocurrency dropped below $90,000 for the first time in seven months.
The purchase, confirmed by President Nayib Bukele through his X account on Monday, represents the Central American nation's largest single-day bitcoin acquisition since the country began accumulating the cryptocurrency in 2021.
The timing proved opportunistic, with bitcoin briefly touching $89,420 during Asian trading hours before partially recovering.
El Salvador's total bitcoin holdings now stand at approximately 7,474 BTC valued at roughly $676 million, making the country one of the largest sovereign holders of the cryptocurrency.
The position has been built through a consistent dollar-cost-averaging strategy that President Bukele first announced in November 2022, committing to purchase one bitcoin per day regardless of market conditions.
Defiance Amid IMF Constraints
The substantial purchase comes despite explicit restrictions imposed by the International Monetary Fund as conditions for a $1.4 billion loan agreement reached in late 2024. The deal included several bitcoin-related constraints that El Salvador agreed to implement in exchange for the financing package.
Under the arrangement, the IMF imposed a continuous quantitative performance criteria prohibiting new bitcoin acquisitions by public sector entities, maintaining what the organization described as a "ceiling of zero" throughout the 40-month program period. The agreement also required El Salvador to amend its Bitcoin Law to make private sector acceptance voluntary, eliminate the option to pay taxes in bitcoin, and wind down government involvement in the state-backed Chivo wallet by July 2025.
Despite these conditions, El Salvador has continued purchasing bitcoin, creating a complex policy landscape that has drawn both praise from the cryptocurrency community and concern from international financial observers. When asked about the apparent contradiction following earlier purchases in March, Bukele responded defiantly on X.
"No, it's not stopping," the president posted. "If it didn't stop when the world ostracized us and most 'bitcoiners' abandoned us, it won't stop now, and it won't stop in the future."
The IMF has maintained a nuanced position on the continued accumulation. In a May review, the fund stated that "efforts will continue" to ensure El Salvador's government bitcoin holdings remain unchanged, while simultaneously noting that program performance had been strong and key fiscal targets had been met.
Some analysts have suggested that recent increases in El Salvador's bitcoin holdings may reflect consolidation across government wallets rather than new market purchases, providing a technical framework for the country to maintain compliance while continuing its accumulation strategy. The IMF's pragmatic acceptance of this arrangement has enabled both parties to claim adherence to the agreement's terms.
Deepening U.S. Crypto Ties
El Salvador's bitcoin strategy has increasingly aligned with the Trump administration's pro-cryptocurrency stance. In June, Bo Hines, executive director of the White House's Presidential Council of Advisers for Digital Assets, met with President Bukele in San Salvador to discuss collaboration on bitcoin and digital asset policies.
Stacy Herbert, director of El Salvador's Bitcoin Office, described the meeting as significant, telling CoinDesk that "the aspiring Bitcoin Superpower came to meet with the OG Bitcoin Country to discuss areas of mutual interest and possible collaboration relating to bitcoin, stablecoins and digital assets."
Herbert added that "extraordinary things" would emerge from the partnership over coming months, without providing specific details. The meeting followed Bukele's earlier visit to the White House in April, where he and President Trump discussed regional security agreements, though bitcoin was not on that particular agenda.
The warming relationship extends to regulatory cooperation. El Salvador's National Commission of Digital Assets has been in discussions with the U.S. Securities and Exchange Commission regarding a cross-border regulatory sandbox, with the idea being for the United States to leverage El Salvador's experience in regulating digital assets to evaluate streamlined approaches for its own framework.
This diplomatic outreach aligns with the Trump administration's stated objective of establishing a Strategic Bitcoin Reserve, which would consist of bitcoin recovered through criminal asset seizures and other budget-neutral methods. Hines' engagement with El Salvador hints at possible interest in modeling aspects of the U.S. reserve strategy on Bukele's approach.
Multi-Pronged Accumulation Strategy
El Salvador's bitcoin treasury has been built through multiple channels beyond direct market purchases. The government has also boosted reserves through sustainable mining operations. According to Reuters reporting from 2024, the country has mined 474 BTC worth approximately $29 million since 2021 using geothermal energy harnessed from the Tecapa volcano.
The mining operation utilizes 1.5 megawatts from a state-owned power plant that produces 102 megawatts total, with 300 processors dedicated to bitcoin mining. This approach positions El Salvador as a pioneer in environmentally sustainable cryptocurrency mining, providing a counter-narrative to criticism about bitcoin's energy consumption and carbon footprint.
The combination of daily purchases and domestic production demonstrates a comprehensive strategy to build substantial bitcoin reserves while diversifying acquisition methods. At current market prices, El Salvador's total holdings of approximately 7,474 BTC represent an unrealized gain of hundreds of millions of dollars compared to the average acquisition cost, though the recent price decline has significantly reduced the paper profits.
Final thoughts
Bitcoin's drop below $90,000 on Tuesday marked a significant psychological break that analysts described as highlighting the market's fragility. The cryptocurrency has now erased its entire 2025 gains and fallen nearly 30% from record highs above $126,000 reached in early October.
The selloff has been attributed to multiple factors including institutional profit-taking ahead of year-end, with U.S. spot bitcoin ETFs experiencing over $3 billion in net outflows over the past three weeks according to SoSoValue data. The decline accelerated after bitcoin formed a technical "death cross" pattern, where the 50-day moving average crossed below the 200-day moving average.
For El Salvador, the market weakness provided exactly the buying opportunity that Bukele's dollar-cost-averaging strategy is designed to capture. By consistently accumulating during downturns, the country has maintained an average purchase price significantly below current market levels, even after the recent correction.
Whether this approach proves successful in the long term depends largely on bitcoin's trajectory over the coming years. The country's continued defiance of IMF restrictions reflects Bukele's conviction that bitcoin represents a superior long-term reserve asset compared to traditional alternatives.
As the first nation to adopt bitcoin as legal tender and one of the largest sovereign holders, El Salvador's strategy continues to serve as a high-profile test case for national cryptocurrency adoption. The outcome will likely influence how other countries approach bitcoin in their own treasury strategies and their relationships with international financial institutions.