El Salvador's Bitcoin Experiment Ends in Disaster with 99.8% Usage Drop

El Salvador's bold decision to adopt Bitcoin as legal tender has backfired. The country saw an initial surge in adoption, but usage plummeted by over 99.8% since its implementation in 2021.

A survey conducted by a Central American University found that 56% of respondents downloaded the government wallet, while 36% used Bitcoin at least once a month. Meanwhile, 14% of businesses initially conducted Bitcoin-related transactions.

However, as investors began to view Bitcoin as a long-term holding rather than a payment method, usage declined sharply. The HODL mindset took hold, with many Salvadorans preferring to wait for future gains rather than spend their BTC daily.

The government's policy changes also contributed to the decline in adoption. The IMF pushed El Salvador to remove mandatory Bitcoin acceptance for merchants as part of a $1.4 billion loan agreement, while the country reduced its Bitcoin purchases and treated it as a long-term treasury asset.