The bear market for Bitcoin (BTC) has broadly strained investors. Corporate cash reserves, large 'whales', and even state owners have all felt the pressure.
The cryptocurrency price drop has reduced the value of El Salvador's holdings while the cost of credit risk insurance has risen to a five-month high, raising concerns about the country's IMF program and debt outlook.
El Salvador's Bitcoin investment is under pressure as the portfolio declines.
According to the latest data from El Salvador's Bitcoin office, the country's Bitcoin reserves stand at 7,560 BTC, worth approximately $503.8 million. According to Bloomberg, the portfolio value has dropped from around $800 million since Bitcoin's peak in October 2025, representing a nearly $300 million decline in four months.
Bukele, a passionate advocate for Bitcoin, has continued to buy one Bitcoin daily. However, this strategy increases the country's exposure to market fluctuations.
Bhutan, on the other hand, sold $22.4 million worth of Bitcoin. The different strategies of El Salvador and Bhutan essentially reflect different risk philosophies.
Bhutan's Bitcoin mining has generated over $765 million in profit since 2019. However, the 2024 Bitcoin halving significantly increased mining costs, narrowing profit margins. Now Bhutan appears to be liquidating some of its reserves, while El Salvador continues its long-term accumulation.
The country has also diversified its investments. Last month, it used $50 million to purchase gold as demand for the safe-haven metal grew amid macroeconomic tensions.
IMF loan negotiations are tightening due to El Salvador's Bitcoin policy.
El Salvador's deepening commitment to cryptocurrency has affected its relations with the International Monetary Fund. The government's ongoing Bitcoin purchases, combined with delays in pension reforms, have complicated the country's IMF agreement.
The IMF has expressed concern over the potential impact of Bitcoin on public finance stability. If the IMF program were to be disrupted, it would undermine one of the key pillars of El Salvador's sovereign debt. Over the last three years, the country's bonds have yielded over 130%, making them one of the success stories in emerging markets.
"The IMF might react negatively if funds were used to increase Bitcoin holdings. Also, a drop in Bitcoin does not alleviate investor concerns," Christopher Mejia, a sovereign analyst for emerging markets at T Rowe Price, noted to Bloomberg.
The IMF approved a 40-month extended funding program on February 26, 2025, releasing approximately $1.4 billion, according to official IMF data. The first review concluded in June 2025, and $231 million was paid at that time.
The second review has been on hold since September, as the government delayed the release of the pension system analysis. During that time, El Salvador continued to increase its Bitcoin reserves despite repeated warnings from the IMF.
The third review is scheduled for March. Each review relates to new loan installments.
"Ongoing Bitcoin purchases pose challenges to the IMF's assessments, in our view. Markets would react very negatively if the anchor provided by the IMF were to be removed," said Jared Lou, who manages the William Blair Emerging Markets Debt Fund.
At the same time, bond markets are signaling growing concerns about El Salvador's economic outlook. Credit default swaps have risen to a five-month high, reflecting increased investor uncertainty regarding the country's repayment capacity.
According to data compiled by Bloomberg, El Salvador is set to pay $450 million in bonds this year, with obligations rising to nearly $700 million next year.
El Salvador's Bitcoin policy now runs parallel to key economic and IMF negotiations. The outcome of upcoming IMF reviews and loan repayment schedules will fundamentally determine investor confidence and the direction of the country's debt sustainability.