In a bold reaffirmation of its commitment to cryptocurrency, El Salvador has acquired an additional 21 Bitcoin (BTC), bringing its national holdings to new heights. President Nayib Bukele announced the purchase on social media, reinforcing the country’s pioneering role in integrating digital assets into its financial framework. This strategic move follows Bitcoin’s nearly 30% dip from its all-time high of $69,000, positioning El Salvador as a consistent buyer during market downturns.
Since becoming the first nation to adopt Bitcoin as legal tender in September 2021, El Salvador has steadily expanded its BTC reserves. The latest acquisition underscores a long-term vision centered on financial innovation, economic sovereignty, and technological advancement.
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A Strategic Accumulation Strategy
El Salvador’s approach to Bitcoin investment mirrors a disciplined “buy the dip” strategy. Rather than reacting to short-term volatility, the government has used price corrections as opportunities to strengthen its digital asset portfolio. This latest purchase of 21 BTC exemplifies that philosophy.
President Bukele stated, “And, we are buying 21 Bitcoin for the occasion,” in a widely shared tweet. The phrase "for the occasion" hints at a symbolic or milestone-driven decision—possibly tied to national events, market conditions, or internal policy goals.
This isn’t the first time El Salvador has capitalized on market dips. Over the past year, the country has made multiple purchases during periods of price consolidation, often acquiring BTC when investor sentiment turned bearish. These moves have sparked global debate but also admiration from crypto advocates who view them as forward-thinking fiscal policy.
Building the World’s First Bitcoin City
Beyond portfolio expansion, El Salvador is advancing one of the most ambitious blockchain infrastructure projects to date: Bitcoin City. Announced last month, this planned urban development aims to become a tax-free, crypto-powered metropolis fueled by geothermal energy from nearby volcanoes.
The city will be financed through sovereign Bitcoin-backed bonds—dubbed "volcano bonds"—issuing $1 billion in debt, with half allocated to purchasing BTC and the other half to funding construction. While details remain in development, the project signals El Salvador’s intent to build a fully functional ecosystem around digital currencies.
Bitcoin City is expected to offer zero income tax for residents, incentivizing entrepreneurs, miners, and tech innovators to relocate. The initiative could serve as a blueprint for how emerging economies leverage decentralized technologies to attract investment and bypass traditional financial gatekeepers.
Global Reactions and Financial Criticism
El Salvador’s crypto-forward policies have drawn sharp criticism from major financial institutions. The International Monetary Fund (IMF) and World Bank have repeatedly warned about macroeconomic risks, regulatory challenges, and potential threats to financial stability.
Andrew Bailey, Governor of the Bank of England, recently voiced concerns over the country’s reliance on a volatile asset like Bitcoin. He emphasized the importance of monetary sovereignty and cautioned against tying national currency systems to decentralized networks without robust safeguards.
Despite these warnings, El Salvador remains undeterred. Government officials argue that Bitcoin offers solutions to longstanding issues such as high remittance fees—over 20% of the country’s GDP comes from overseas workers sending money home—and limited access to banking services.
By embracing BTC, El Salvador aims to reduce dependency on the U.S. dollar, lower transaction costs, and promote financial inclusion among its unbanked population.
Bitcoin Network Trends: Accumulation Amid Volatility
While El Salvador makes headlines with its national strategy, broader Bitcoin network data reveals a quiet but significant trend: long-term accumulation.
According to analytics firm Glassnode, Bitcoin is transitioning from a liquid to an illiquid state at a rate of approximately 100,000 BTC per month. Illiquid coins are typically held in wallets with little spending history—often associated with HODLers and institutional investors preparing for future bull markets.
This shift suggests growing confidence among seasoned holders despite short-term price fluctuations. In December, while overall address activity declined and mining profitability saw mixed results, long-term investors continued accumulating—the hallmark of a maturing market cycle.
Glassnode also noted that new investors faced significant pressure following the November all-time high. Daily on-chain loss realization reached $50–$100 million after the December 4 liquidation cascade. Such events typically affect recent buyers who purchased near peak prices, reinforcing the idea that market downturns act as a filter for speculative capital.
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Frequently Asked Questions (FAQ)
Q: Why is El Salvador buying more Bitcoin?
A: El Salvador is strategically expanding its BTC reserves to support its legal tender policy, promote financial innovation, and capitalize on lower prices during market dips.
Q: How many Bitcoins does El Salvador own now?
A: While exact figures vary due to ongoing purchases, estimates suggest El Salvador holds over 2,500 BTC as of early 2025, with regular additions made by the government.
Q: What is Bitcoin City?
A: Bitcoin City is a planned urban development in El Salvador designed to operate entirely on Bitcoin and renewable energy, funded by BTC-backed bonds.
Q: Is Bitcoin legal tender only in El Salvador?
A: As of now, El Salvador is the only country where Bitcoin is officially recognized as legal tender alongside the U.S. dollar.
Q: How has the IMF responded to El Salvador’s Bitcoin policy?
A: The IMF has expressed concerns about financial stability, consumer protection, and anti-money laundering risks, urging caution and stronger regulatory frameworks.
Q: Are other countries considering similar moves?
A: Several nations—including Paraguay, Panama, and parts of Africa—are exploring pro-crypto legislation, though none have adopted BTC as legal tender yet.
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Conclusion
El Salvador’s purchase of 21 additional Bitcoins is more than a financial transaction—it’s a statement of belief in the future of decentralized money. Amid global skepticism and market volatility, the nation continues forging a unique path toward digital economic transformation.
From expanding its BTC holdings to launching revolutionary projects like Bitcoin City, El Salvador is testing whether blockchain technology can redefine national finance. Whether this experiment succeeds or fails, it offers invaluable lessons for policymakers, investors, and innovators worldwide.
As long-term accumulation trends grow stronger and institutional interest deepens, the world watches closely—because what happens in El Salvador may one day echo across continents.