The cryptocurrency market has been marked by contrasting developments, with El Salvador doubling down on its Bitcoin strategy despite commitments to scale back crypto-related activities and the broader market experiencing a turbulent 24 hours. While El Salvador added 12 Bitcoin to its reserves amidst record-high prices, the market as a whole saw significant liquidations totaling $1.28 billion, driven by sharp declines in major altcoins like Solana and Cardano. Bitcoin displayed relative stability, though its recent surge to a fresh all-time high has fueled discussions about its role as a strategic asset, including speculation over a potential US Bitcoin reserve.
El Salvador Defies IMF Agreement, Bolsters Bitcoin Reserves Amid Historic Price Surge
El Salvador, the first nation to adopt Bitcoin as legal tender, continues its bold cryptocurrency strategy, purchasing 12 additional Bitcoin over the past two days, according to announcements from the country’s National Bitcoin Office. The acquisition comes shortly after the government struck a $1.4 billion deal with the International Monetary Fund (IMF), which required scaling back some of its Bitcoin-related initiatives.
On Jan. 19, the National Bitcoin Office revealed it had added 11 Bitcoin worth over $1 million to its Strategic Bitcoin Reserve. Another Bitcoin was purchased on Jan. 20 for $106,000. These acquisitions bring the nation’s total Bitcoin holdings to 6,044 BTC, valued at approximately $610 million at Bitcoin’s current trading price of $101,000, per data from CoinGecko.
Notably, this purchase defies El Salvador’s agreement with the IMF, which had stipulated measures to limit certain Bitcoin policies, including unwinding government involvement in the Chivo wallet and making Bitcoin acceptance by private enterprises voluntary. The IMF deal, which provides critical financial support to the Central American nation, was seen as a pragmatic compromise to stabilize its economy. However, the latest acquisitions suggest that President Nayib Bukele remains committed to his vision of Bitcoin as a cornerstone of El Salvador’s financial future.
El Salvador’s renewed Bitcoin buying spree coincides with a historic surge in Bitcoin prices. On Jan. 20, the cryptocurrency hit an all-time high of $109,000, surpassing its previous peak of $108,000 set in December 2024. This price rally, which saw Bitcoin briefly touch record levels, occurred just hours before Donald Trump’s inauguration as the 47th President of the United States.
The sharp increase in Bitcoin’s value has significantly boosted El Salvador’s portfolio. As of Jan. 20, the nation’s Bitcoin holdings were up by $179 million, based on the Nayib Bukele portfolio tracker. This profit shows the speculative success of Bukele’s high-stakes gamble on cryptocurrency, even as critics point to the challenges faced by Salvadorans in adopting Bitcoin for everyday use.
While Bitcoin’s price rally and El Salvador’s growing reserves paint a picture of financial optimism, public sentiment within the country tells a different story. A recent survey conducted in October 2024 revealed that 92% of Salvadorans do not use Bitcoin for transactions, up from 88% in a 2023 survey. Despite government efforts to promote Bitcoin adoption through initiatives like the Chivo wallet and the Bitcoin law passed in September 2021, the majority of Salvadorans remain skeptical of cryptocurrency as a practical payment method.
The government has faced international scrutiny and domestic criticism for its aggressive Bitcoin policies, with many arguing that the funds could be better allocated toward pressing economic and social needs. Nonetheless, Bukele and his administration have remained steadfast, framing Bitcoin as a tool for financial independence and long-term economic growth.
A Global Trend of Bitcoin Accumulation
El Salvador’s Bitcoin strategy aligns with a growing trend among nations to accumulate the cryptocurrency as a strategic asset. Bhutan, for instance, has been quietly mining Bitcoin for years and reportedly holds approximately $780 million in digital assets, according to blockchain analytics firm Arkham Intelligence. These moves reflect a broader recognition of Bitcoin’s potential as a hedge against inflation and geopolitical risks.
El Salvador’s latest Bitcoin purchases signal that President Bukele remains undeterred by international pressure or public skepticism. The country’s $1.4 billion agreement with the IMF may temper the scale of its Bitcoin initiatives, but the administration’s actions suggest that cryptocurrency will remain central to its economic strategy.
As Bitcoin’s price continues to break records, El Salvador stands as a case study for the integration of digital assets into national financial systems. Whether this gamble will yield sustainable economic benefits or exacerbate existing challenges remains a point of contention. For now, El Salvador’s bold experiment in cryptocurrency continues to capture global attention and spark debates about the future of money in the digital age.
Cryptocurrency Market Faces Turbulent 24 Hours as Altcoins Plunge and Liquidations Soar
The cryptocurrency market endured a volatile day yesterday, with significant declines across major altcoins and over $1.28 billion in liquidations. Traders were confronted with heightened market turbulence as Bitcoin displayed relative stability compared to other assets such as Solana and Cardano, which suffered substantial losses.
According to Coinglass data, over 386,000 traders were liquidated, signaling a dramatic shift in sentiment. The total liquidations amounted to approximately $1.28 billion, with $816 million stemming from long positions and $307 million from shorts. This imbalance reflects the rapid price movements and adjustments in trader sentiment as market dynamics shifted away from recent bullish momentum.
Bitcoin, which recently touched a record high of $109,000 on Sunday, experienced a modest decline of 2.2% to trade at $103,500. Despite the slight drop, Bitcoin’s performance remained relatively resilient compared to the broader market’s struggles.
Major altcoins bore the brunt of the sell-off as risk aversion among traders increased, with many reallocating capital to stablecoins. Solana, a prominent Ethereum competitor, saw its price plunge by over 9%, while Cardano experienced a 5% decline. The broader altcoin market mirrored these losses, reflecting the heightened uncertainty and cautious sentiment among investors.
Market analysts have warned of continued volatility in the days to come. Lukman Otunuga, Senior Market Analyst at FXTM, emphasized the impact of macroeconomic factors, stating, “Bitcoin’s sensitivity to US economic data and Fed rate expectations means traders should brace for heightened volatility in the near term.”
Meanwhile, QCP Capital analysts noted a mix of optimism and caution. “While funding rates on derivatives platforms like Deribit remain elevated, suggesting underlying bullish sentiment, the market appears to be consolidating after its recent rally,” the firm observed.
Speculation Over a US Bitcoin Strategic Reserve
Adding to the market’s intrigue is speculation about a potential US Bitcoin Strategic Reserve (SBR). The concept has gained traction amid discussions about Bitcoin’s role as a strategic asset akin to gold. According to Polymarket, the probability of President Trump signing an executive order to establish an SBR within his first 100 days in office currently stands at 38%.
If implemented, the SBR would involve the US government acquiring and holding Bitcoin as part of its national reserves. However, the policy faces significant hurdles, including regulatory alignment and collaboration with the Federal Reserve.
Bitget CEO Gracy Chen highlighted the challenges of such a move, stating, “Establishing a Bitcoin strategic reserve within the first 100 days remains largely speculative. Implementing such a disruptive policy requires thorough planning, regulatory support, and alignment with the Federal Reserve’s framework.”
As the market reacts to the recent turbulence, traders are closely watching Bitcoin’s ability to maintain its relative stability. Analysts suggest the cryptocurrency’s consolidation phase could provide a foundation for its next major move, though external factors such as macroeconomic data and regulatory developments will likely play a significant role in shaping its trajectory.
The heightened volatility brings attention to the evolving nature of the cryptocurrency market, where rapid price swings and speculative narratives continue to drive both opportunities and risks. With Bitcoin’s role as a strategic asset under increasing discussion, the market’s next phase could have profound implications for the broader financial ecosystem.
