El Salvador is set to break free from reliance on external debt to fund its national budget by 2025, according to President Nayib Bukele’s announcement on Independence Day. This milestone is attributed to the country’s Bitcoin strategy, marking a shift towards financial independence.
During his Independence Day address broadcast on the X platform, Bukele revealed that the government plans to introduce a budget in 2025 that does not involve borrowing external funds. Stacy Herbert, Director of El Salvador’s national Bitcoin Office, emphasized this advancement in a post on X, highlighting the country’s journey towards genuine freedom.
The success in achieving this goal is largely credited to President Bukele’s strategic move with Bitcoin. Herbert referenced a prediction from Ark Invest’s CEO Cathie Wood back in May, foreseeing a tenfold increase in El Salvador’s GDP over the next five years due to the President’s implementation of Bitcoin as a significant reserve asset.
El Salvador’s progressive approach to leveraging Bitcoin to enhance its economy became prominent in September 2021 when it became the first nation to adopt BTC as legal tender. President Bukele fortified this stance with the ‘1 BTC a day’ initiative launched in November 2022, through which the government daily acquires one Bitcoin. Current data from Arkham Intelligence shows that El Salvador possesses 5,875 BTC, worth $345 million.
Aside from direct purchases, the country has also augmented its Bitcoin reserves through mining, using eco-friendly volcano-powered geothermal energy for mining operations, enhancing cost efficiency. Moreover, El Salvador aims to utilize BTC to attract foreign investments by proposing the establishment of private Bitcoin banks, providing a more accessible investment avenue compared to traditional banks.
The profitable nature of holding Bitcoin has not escaped investors’ notice, as exemplified by El Salvador’s success story. Prominent figures like Microstrategy’s co-founder Micheal Saylor have mirrored President Bukele’s adoption of the flagship cryptocurrency, evidenced by Microstrategy’s impressive performance since integrating Bitcoin into its strategy in 2020.
Microstrategy continues to accumulate BTC on its balance sheet, with a recent noteworthy purchase of $1.11 billion worth of Bitcoin, resulting in a significant surge in MSTR stock value. This success story has caught the attention of former President Donald Trump, who has expressed interest in implementing a similar Bitcoin strategy if elected.
In a potential move akin to El Salvador’s approach, President Trump aims to establish a strategic Bitcoin reserve. The United States currently holds the largest Bitcoin reserves, with 203,239 BTC valued at $11.91 billion, predominantly acquired from seizures, including those from illicit sources like the dark web marketplace Silk Road.
The encapsulation of El Salvador’s groundbreaking initiative in shedding external debt for a Bitcoin-backed financial model in 2025 paints a promising future for economic independence and growth, potentially setting a precedent for other nations.