Updated on:12/02/2025 05:54 PM 
The recent fluctuations in Bitcoin prices and the wider cryptocurrency market have intensified skepticism toward the leading digital currency, fueling discussions about the effectiveness of El Salvador's Bitcoin adoption strategy, according to Julio Sevilla, a University of Georgia professor in an interview with NPR.
Recent market turbulence caused Bitcoin to plummet to approximately $17,600, marking the first time it fell below the previous cycle peak in its history, which has contributed to negative market sentiment. Combined with challenging macroeconomic conditions, including increasing inflation and potential further interest rate hikes, many analysts anticipate continued market challenges ahead.
A Sunday market recovery temporarily pushed BTC back above the psychologically significant $20,000 threshold, though the sustainability of this upward trend remains uncertain.
El Salvador created global headlines in September 2021 by becoming the pioneering nation to establish Bitcoin as legal tender. President Bukele championed this initiative as a transformative economic opportunity for the Central American nation, declaring:
Looking at the current landscape, BTC has experienced a decline of over 60% since the implementation of the Bitcoin Law. Critics suggest that President Bukele and supporting legislators may have been imprudent with national financial resources in pursuing this cryptocurrency strategy.
Addressing these concerns, Sevilla explained that $150 million of public funds were allocated to the Bitcoin investment initiative. Given that this represents merely 4% of the country's total reserves, the government's financial stability would remain intact even in an extreme scenario where BTC became worthless.
Nevertheless, Sevilla emphasized that the investment amount remains substantial, particularly considering El Salvador's already fragile economic foundation, noting:
Referencing recent studies regarding cryptocurrency adoption patterns among Salvadorians, Sevilla highlighted that while two-thirds of the population downloaded the Chivo Wallet, this was primarily motivated by the complimentary $30 incentive. Following the initial promotion period, only 20% of registered users continue to actively utilize the digital wallet application. Sevilla further commented:
Despite these challenges, President Bukele maintains strong popularity among voters. However, Sevilla cautioned that this political capital creates limited accountability for "these unconventional economic initiatives." He elaborated:
Regarding the international implications of Bitcoin adoption, the professor emphasized the complex relationship between El Salvador and the IMF. Sevilla suggested that provoking the IMF was strategically unwise given the nation's significant financial obligations to the organization.
