Was El Salvador’s Bitcoin bet a failure? Locals weigh in

El Salvador once made history as the first country to adopt Bitcoin as legal tender, a move hailed by crypto advocates as revolutionary and dismissed by critics as reckless. President Nayib Bukele positioned it as a bold step toward financial independence, foreign investment, and breaking free from reliance on the US dollar.

But now, that chapter has officially closed. El Salvador has passed a reform removing Bitcoin’s legal tender status, making it just another competing currency. The move is part of the country’s compliance with a $1.4 billion deal with the International Monetary Fund (IMF)—a sum that dwarfs El Salvador’s $600 million worth of Bitcoin holdings.

For many in the Bitcoin community, the reversal feels like a capitulation to global financial pressures. John Dennehy, founder of My First Bitcoin, put it bluntly: "The IMF is the judge, jury, and executioner." He and others fear that El Salvador’s backtrack sets a precedent where global institutions dictate a nation’s economic policies.

Still, El Salvador is not walking away from Bitcoin entirely. Bukele continues to purchase Bitcoin for the country’s reserves, and Tether’s recent moves signal that El Salvador still aims to be a digital assets hub. The question now is whether Bukele is playing a longer game—or if this marks the quiet end of El Salvador’s crypto-first ambitions.

A numbers-driven view from Argentina

For 22-year-old Lara, an actuarial mathematics student from Argentina who once studied monetary theory under Argentina’s current president, Javier Milei, numbers tell the story of economic survival. 

Studying actuarial mathematics in a country once plagued by hyperinflation, debt crises, and drastic monetary policy shifts, she sees El Salvador’s Bitcoin experiment as technically impressive but politically fragile.

“From a data-driven and econometric perspective, Bitcoin adoption, security improvements, and short-term foreign investment in El Salvador look fantastic,” she told The Crypto Radio. “But managing a Latin American economy is incredibly difficult, especially considering the country’s historical challenges with armed groups.”

Argentina, meanwhile, is undergoing its own radical economic shift under Milei, a self-proclaimed anarcho-capitalist and Bitcoin advocate. However, unlike Bukele, Milei has not rushed into Bitcoin adoption, instead prioritizing a deep fiscal adjustment to tackle the country’s deficit and inflation crisis.

“The government is focused on reducing state intervention and closing the deficit,” Lara explained. “If this stabilizes the economy without a prolonged recession, we could see a rebound. But if the adjustment is too harsh without productivity growth, recovery could take over a decade.”

To her, Bitcoin’s future in Argentina will depend on whether it fits into a broader, structured economic strategy—not just as a political statement but as a real tool for financial stability.

A developer’s take from Brazil

While Lara looks at Bitcoin through an economist’s lens, Palo—a crypto developer who lived in Brazil—commented on the initial Bitcoin strategies, which eventually met an unfortunate but predictable compromise.

“Bukele is doing great work making a Bitcoin reserve. We should have done that a long time ago,” Palo told The Crypto Radio.

For Palo, Bitcoin is not just a financial asset—it’s a hedge against government overreach and economic instability. He sees El Salvador’s initial adoption as a long-overdue move that Latin America should have embraced years ago.

“Milei is a huge crypto bro,” he said with admiration. “He’s a visionary, a true libertarian at heart. Argentina is on track to follow a similar path to El Salvador, but he has priorities to take care of first.”

Brazil, on the other hand, is taking a more traditional regulatory approach. Under President Lula da Silva, Palo worries that excessive taxation could stifle crypto adoption.

“Lula wants to heavily tax crypto, which is typical of socialists,” he remarked. “Brazil’s government isn’t hostile to crypto, but they’re definitely not as forward-thinking as El Salvador or even Milei’s Argentina.”

Despite the shift in El Salvador and even Bitcoin’s recent price actions, Palo remains bullish on Bitcoin and sees it as an inevitable part of Latin America’s future.

“Who cares about volatility? Volatility is the price you pay for performance,” he said. “Crypto runs in four-year cycles, and understanding that is key. Even with its ups and downs, having Bitcoin is better than relying on unstable local currencies.”

A revolution, a tool, or just hype?

The contrast between Lara’s cautious economic outlook and Palo’s unwavering faith in crypto highlights a fundamental debate in Latin America: Is Bitcoin an economic solution, or just one tool among many?

For those like Palo, Bitcoin represents freedom—a way to escape the grip of traditional financial institutions and government overreach. He sees El Salvador’s experiment as the beginning of a bigger trend in Latin America.

For those like Lara, Bitcoin must be integrated into a broader, well-structured economic plan. In her view, financial stability, productivity, and smart governance matter just as much as innovation.

For critics, the IMF deal proves that Bitcoin was never a viable foundation for an economy—just a publicity stunt that ultimately gave way to financial reality. But for supporters, it’s a strategic adjustment rather than a full reversal—El Salvador still holds Bitcoin reserves, and Bukele continues to align the country with digital asset adoption.

Whether through Milei’s libertarian push, Bukele’s recalibrated approach, or Brazil’s cautious regulation, crypto remains at the heart of the region’s economic evolution. The IMF may have influenced El Salvador’s policy, but it hasn’t killed Bitcoin’s momentum in Latin America.

Governments may adjust, regulate, or even backtrack—but Bitcoin remains a catalyst for economic change in Latin America.