El Salvador's Bitcoin holdings have surged to more than $760mn as the cryptocurrency climbed above $120,000, vindicating President Nayib Bukele's controversial digital asset strategy while successfully navigating conditions imposed by international lenders.

The Central American nation holds over 6,237 Bitcoin at an average cost basis of approximately $42,000, according to Coinotag data, reflecting a multi-year accumulation strategy since adopting the cryptocurrency as legal tender in 2021. With Bitcoin recently crossing the $122,000 threshold, El Salvador's portfolio has nearly tripled its initial investment cost.

The cryptocurrency's surge has been fuelled by institutional demand and expectations of regulatory clarity from the United States, where Republicans have designated this week as "crypto week" with Congress set to vote on legislation that could establish federal frameworks for digital assets. The rally has been further supported by President Donald Trump's pro-cryptocurrency stance, with the broader digital asset market now valued at approximately $3.8 trillion.

The windfall comes as El Salvador successfully completed the first review of its International Monetary Fund programme on June 27, securing an immediate disbursement of $118mn and bringing total disbursements to $231mn under the 40-month Extended Fund Facility worth $1.4bn.

The IMF's Executive Board noted that "programme performance has been solid" and praised the authorities for meeting key fiscal and international reserve targets "with margins". Crucially, the Fund confirmed that El Salvador continues to comply with conditions to keep its Bitcoin holdings unchanged, despite earlier data suggesting continued cryptocurrency purchases.

In its assessment, though, the IMF stated that "efforts should continue to keep the public sector's holdings of Bitcoin unchanged" and called for the "early unwinding of the public sector's participation in the government's e-wallet (Chivo)". The board stressed the importance of "clear and consistent communication" regarding Bitcoin policy, highlighting ongoing tensions around the cryptocurrency strategy.

El Salvador's crypto approach has evolved significantly since 2021, when it became the first nation to adopt Bitcoin as legal tender. In January, Bukele's Congress reversed the mandatory acceptance requirement for Bitcoin payments, fulfilling a key IMF condition while preserving the government's ability to hold the cryptocurrency as a reserve asset.

The successful IMF review provides breathing room for Bukele's administration as it balances cryptocurrency ambitions with traditional multilateral financial arrangements. The programme focuses on strengthening public finances, rebuilding external buffers, and enhancing governance frameworks to create conditions for stronger growth.

However, the IMF warned of downside risks from "escalating global trade tensions and tighter immigration policies elsewhere" that could negatively impact remittances and growth. Against this backdrop, the Fund emphasised the importance of sustaining reform momentum and standing ready to activate contingency plans.

For now, El Salvador's Bitcoin success sets a blueprint for sovereign cryptocurrency reserves to serve as a viable asset class for nations seeking diversification, provided they can maintain compliance with international financial obligations during periods of volatility.