El Salvador Nears IMF Deal on Chivo Sale While Amplifying BTC Accumulation
El Salvador is advancing “well‑advanced” negotiations with the IMF over conditions tied to a $1.14 billion Extended Fund Facility (EFF) loan, with a key plank being the planned sale (privatization) of the state-run Chivo Bitcoin wallet to reduce sovereign crypto exposure and boost transparency. The IMF has praised El Salvador’s stronger‑than‑expected macro performance — forecasting roughly 4% real GDP growth and noting fiscal consolidation, expanded social spending and legal/financial reforms — while insisting on steps to scale back public‑sector involvement in Bitcoin functions and to mitigate BTC‑related financial risks. Authorities continue to accumulate bitcoin, bringing official holdings to more than 7,500 BTC after a reported single purchase of over $100 million. The government has also passed an Investment Banking Law to enable digital‑asset services and attracted crypto firms such as Tether to relocate, signalling continued pro‑crypto policy even as it pursues Chivo divestment. For traders, the immediate implications are mixed: ongoing large sovereign BTC purchases support demand fundamentals for BTC, while a Chivo sale and tighter IMF‑linked oversight could reduce perceived sovereign crypto risk and volatility in the medium term. The timing and structure of the Chivo privatization, alongside any future purchases or sales by the state, will be key catalysts to watch.
Bullish
Net effect on BTC price is likely bullish. Reasons: 1) Continued sovereign accumulation (reported single purchase >$100M and total >7,500 BTC) increases institutional demand and reduces available supply, supporting price. 2) IMF‑linked reforms and planned Chivo privatization should lower sovereign crypto risk and regulatory uncertainty over time, which can attract more institutional participation and reduce downside tail risk. 3) Near‑term volatility could rise around announcements (sale terms, tranche disbursement, further buys/sells), but these are event‑driven and do not negate the underlying demand pressure from state purchases. Overall, persistent government buying plus a move toward private oversight and transparency point to a positive medium‑term price bias for BTC.