The Bitcoin (BTC) bear market has weighed on investors across the entire spectrum. Corporate wallets, large whale wallets, and even state holders have felt the pressure.
The fall of cryptocurrency has reduced the value of El Salvador's holdings, while credit swap agreements have risen to the highest level in five months – raising concerns for the country's IMF program and debt development.
El Salvador's Bitcoin venture under pressure after portfolio decline
According to the latest figures from El Salvador's Bitcoin office, the country has Bitcoin reserves of 7560 BTC, valued at approximately $ 503.8 million. Bloomberg reported that the portfolio's value has fallen from around $ 800 million at Bitcoin's peak in October 2025, representing a decline of nearly $ 300 million in just four months.
Bukele, a strong Bitcoin supporter, has continued to buy one Bitcoin every day. However, this strategy increases the country's exposure to significant market fluctuations.
In comparison, Bhutan recently sold Bitcoin for $22.4 million. The different strategies of El Salvador and Bhutan reflect fundamentally different risk philosophies.
Bhutan's Bitcoin mining has generated over $765 million in profit since 2019. However, the halving of Bitcoin in 2024 led to significantly increased mining costs, which have squeezed margins and reduced returns. Bhutan therefore seems to be selling off parts of its holdings, while El Salvador continues to prioritize long-term accumulation.
However, the country has also diversified its portfolio. Last month, they spent $50 million to buy gold, following increased demand for the safe asset amid macroeconomic turmoil.
IMF loan negotiations are facing challenges due to El Salvador's Bitcoin policy.
El Salvador's increased focus on cryptocurrency has affected its relationship with the International Monetary Fund. The government's continued Bitcoin purchases, combined with delays in implementing pension reform, have complicated the IMF agreement.
The IMF has expressed concern about the potential impact of Bitcoin on the budget balance. A disruption in the IMF program would weaken one of the key supporting elements behind El Salvador's rise in public debt. Over the past three years, the country's bonds have yielded over 130%, making them one of the biggest success stories in emerging markets.
“The IMF may react if disbursements are potentially used to increase Bitcoin. The current drop in Bitcoin is also not helping to reassure investors,” said Christopher Mejia, EM analyst at T Rowe Price, to Bloomberg.
The IMF approved a 40-month extended loan agreement on February 26, 2025, with a total loan ceiling of around $1.4 billion, according to official IMF documents. The first review was completed in June 2025, with $231 million disbursed.
But the second review has been on hold since September, after the government postponed the release of an analysis of the pension system. During this period, El Salvador has continued to increase its Bitcoin reserves despite repeated warnings from the IMF.
A third review is scheduled for March, and each review triggers new loan disbursements.
“If Bitcoin purchases continue, we believe it could create challenges for future IMF reviews. The market may react very negatively if the support provided by the IMF is withdrawn,” said Jared Lou, who is involved in managing the William Blair Emerging Markets Debt Fund.
At the same time, the bond market is sending signals of growing concern for El Salvador's public finances. Credit default swaps have risen to the highest level in five months and indicate that investor anxiety about the country's repayment ability is increasing.
According to data from Bloomberg, El Salvador expects $450 million in bond maturities this year, with obligations rising to nearly $700 million next year.
El Salvador's Bitcoin policy is now being discussed alongside the country's key negotiations on the economy and the IMF. The outcome of the upcoming IMF reviews and the country's bond repayment plan will be crucial for whether investors regain confidence and for the sustainability of the country's debt developments.