The fall of bitcoin reopens the debate about its real impact on El Salvador's economy and daily life

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By John Merolla

Reporter, Life News Today

The sharp fall in the price of bitcoin has once again, put the bet that El Salvador made in 2021 by making the cryptocurrency legal tender, under the magnifying glass. Today, the bitcoins held by the State are worth more than 144 million dollars less than at the end of 2025, a decrease that reflects the volatility of an asset that depends exclusively on international markets.

At the end of 2025, the Salvadoran government accumulated 7,518 bitcoins, worth approximately 658 million dollars. Although it later acquired 46 more units, reaching a total of 7,564, the drop in the price reduced the total value of those reserves to about 513 million dollars as of February 16. The difference represents a drop of close to 22% compared to its previous valuation. If compared to the all-time high that the cryptocurrency reached in October 2025, when it exceeded $126,000 per unit, the correction is around 45%.

The loss is, for now, accountable: the government did not sell its assets and maintains that it will maintain its long-term strategy. However, the situation reopens questions about the real impact of having incorporated a highly volatile asset into public reserves.

When President Nayib Bukele promoted the measure in September 2021, he argued that it would modernize the economy, attract technological investments, reduce costs in sending remittances and expand access to financial services for historically unbanked sectors. The country offered tax incentives to the tech sector and promoted the use of state-owned digital wallets to facilitate bitcoin transactions. In practice, however, most Salvadorans continued to use the United States dollar for their daily operations. Salaries, prices and commercial transactions continued to be denominated mostly in the United States currency. Studies have shown that bitcoin's daily use was limited, in part due to the volatility of its price, which can change rapidly in a matter of days or even hours.

Meanwhile, the most profound change that El Salvador experienced in recent years was not directly related to bitcoin, but to security. The country, long among the world's most violent in terms of gang activity, saw a sharp drop in homicide rates following the implementation of a state of emergency and stricter security policies. This transformation altered the daily lives of millions of people: businesses that were previously extorted returned to operate with greater tranquility, areas considered dangerous recovered economic activity and tourism grew significantly. The improvement in security strengthened the country's international perception and generated a more favorable climate for investment and consumption. Many analysts argue that this factor had a more tangible impact on the everyday economy than the adoption of cryptocurrency. More visitors, greater commercial movement and a sense of stability directly influenced economic activity.

In terms of prices, El Salvador has experienced inflationary pressures similar to those of the rest of the world in recent years, mainly due to global factors such as rising energy and food costs. There is no conclusive evidence that bitcoin adoption alone has led to significant increases or decreases in the cost of living. For most citizens, the direct effect on their domestic economy was limited.

The debate also reaches the fiscal front. El Salvador was already facing high levels of public debt before incorporating bitcoin as legal currency. The decision generated tensions with international organizations, especially the International Monetary Fund, and increased the caution of some investors. Although investment in bitcoin represents a limited portion of the total country’s finances, its volatility introduces additional uncertainty in a context where the country needs to maintain fiscal balance and meet debt commitments.

The fall of bitcoin not only implies a reduction in the valuation of state reserves, but also raises broader questions about the benefits of having made a cryptocurrency part of the national economic strategy. While security seems to have concretely transformed everyday life and the business climate, bitcoin's structural impact remains the subject of debate. The future of this commitment will depend, to a large extent, on the evolution of a global market that no country can control on its own.