“El Salvador’s Bold Bitcoin Bet: How a High-Stakes Gamble Turned Into $100 Million in Gains”

El Salvador’s Bitcoin Bet Pays Off: $100 Million in Unrealized Gains

In a world where even the boldest governments have been cautious about crypto, El Salvador’s President, Nayib Bukele, went all in. Since 2021, El Salvador has accumulated a Bitcoin stockpile, becoming the first country to adopt the cryptocurrency as legal tender. Fast forward to today, and Bitcoin’s recent spike has pushed El Salvador’s holdings into the green, with unrealized gains crossing the $100 million mark. Not one to miss a moment, Bukele took to Twitter to gloat, exclaiming, “I told you so.

”A High-Stakes Experiment Under Scrutiny

Bukele’s crypto experiment has faced intense criticism. In 2022, the International Monetary Fund (IMF) warned of potentially destabilizing effects on El Salvador’s economy. That same year, a Bloomberg article suggested the country’s Bitcoin gamble had failed—a claim Bukele dismissed as “full of lies.” Now, two years in, El Salvador’s Bitcoin holdings, as tracked by blockchain analytics firm SpotOnChain, stand at $516.43 million, with about $100.65 million of that being unrealized profit. This equates to nearly a 20% profit margin, a significant gain, albeit one that remains largely hypothetical for now.

Unrealized profits represent the paper gains on an asset that hasn’t been sold, meaning the figure could fluctuate with Bitcoin’s notoriously volatile price movements. And selling such a large position would introduce what’s known as “slippage”—selling pressure that could drive down Bitcoin’s price, meaning Bukele’s potential $100 million in gains would be difficult to capture in reality.

Still, Bukele remains resolute, once stating in February that El Salvador had no plans to sell despite having briefly achieved a 40% gain at that point. Instead, he doubled down, committing to buy one Bitcoin per day after the collapse of FTX, when the price hovered around $16,600. Bitcoin has since climbed to over $89,000—a staggering 436% increase.

A Rally Driven by Politics

Curiously, El Salvador’s Bitcoin fortune flipped from a $14 million loss in early November to a $100 million gain, seemingly driven by an unexpected factor: the U.S. presidential election. Bitcoin surged after Donald Trump’s reelection, with Trump viewed as a pro-crypto candidate compared to Kamala Harris, the more crypto-cautious Democrat. Speculation ran high that a Trump administration might usher in favorable conditions for Bitcoin, fueling the rally.

Senator Cynthia Lummis, a crypto-supporting Republican, has outlined plans for a strategic Bitcoin reserve in the U.S., potentially buying up 5% of the Bitcoin supply over five years and holding it in reserve for two decades. This proposed reserve, which would mirror El Salvador’s stockpile, could bring new legitimacy to Bitcoin on a global scale. While the U.S. may just be warming up to the idea, El Salvador has been executing this strategy for years, including its unique “volcano bonds”—Bitcoin bonds financed through renewable geothermal energy sourced from volcanic activity.

Bukele’s Bitcoin Gamble Secures Popular Support

Bukele’s decision to make Bitcoin a core element of the nation’s economy appears to have resonated with the Salvadoran public, as evidenced by his reelection in February. Now, the country’s controversial Bitcoin venture seems vindicated as Bitcoin’s price rise boosts the national balance sheet by $100 million in unrealized profit.

What started as a daring experiment is now a point of pride for Bukele and, perhaps, a signpost for other countries contemplating their own Bitcoin strategies. Whether El Salvador’s gains remain theoretical or materialize into real-world benefits, one thing is certain: this small Central American nation has become a significant player in the global crypto landscape.