More than two years after implementing Bitcoin (BTC) as legal tender, El Salvador’s big crypto bet is still facing challenges. This includes the government’s own BTC investments, which are currently underwater due to ill-timed purchases made by the president.
The Government’s BTC Investments
According to the Nayib Bukele Portfolio Tracker website, the government of El Salvador currently owns 3,124 BTC worth $118.3 million. Unfortunately, this reflects a 6.44% decrease or $8.1 million loss from the nation’s initial cost basis.
It is difficult to determine the exact amount of BTC held by El Salvador since the bank managing the government’s Bitcoin funds has chosen to remain silent on the matter. However, the Nayib Bukele Portfolio Tracker website provides an estimate based on public tweets from President Nayib Bukele, which disclose the specific amounts and purchase prices of the nation’s BTC investments.
The government began purchasing BTC in September 2021, around the same time Bitcoin became legal tender. However, the purchase turned out to be unfortunate timing, as the price of Bitcoin dropped from an average of ~$52,000 to $43,000 within a few days.
President Bukele continued to make purchases even as the price declined further. Between October and November 2021, he bought an additional 520 BTC at around $59,000 per Bitcoin, believing he was “buying the dip” each time.
The Road to Recovery
Despite the initial losses, El Salvador’s BTC investment has been able to recover partially due to the increase in Bitcoin’s value. Since last year, Bitcoin has appreciated by 128%, resulting in a 45% increase in El Salvador’s overall investment.
President Bukele’s unique approach to Bitcoin trading, which he claims to have done using public funds from his mobile phone, has attracted attention. He even mentioned conducting trades while naked and in the toilet.
Comparatively, MicroStrategy, a company with a significant BTC portfolio, has seen more success in its Bitcoin investments than El Salvador. The company’s chairman, known for his laser-eyed support of Bitcoin, regularly announces the company’s BTC holdings. Unlike El Salvador, MicroStrategy’s BTC ownership is verifiable through its quarterly financial reports and has proven to be profitable. With their impressive 158,400 BTC stack, the company has made a profit of $1.28 billion, with its portfolio now worth over $6 billion.
