El Salvador is facing a major setback in its crypto experiment as crypto remittances have dropped by 45%, raising serious concerns about the country’s economic stability. The decline, triggered by recent Bitcoin volatility, could severely affect Salvadorans who rely on remittances as a primary source of income.
El Salvador Sees Sharp Decline in Crypto Remittances
According to official data, crypto remittances to El Salvador dropped by 44.5% in Q1 2025, compared to the same period in 2024. This marks the first significant drop since the country adopted Bitcoin as legal tender in 2021.
Back in Q4 2021, crypto remittances peaked at $57 million through the Chivo Wallet. However, the number has now halved, with crypto inflows down to just $16 million so far in 2025. In 2024, the total was $28.83 million, averaging around $7 million per quarter through roughly 27,000 transactions.
Crypto transfers now account for a mere 0.52% of the country’s $3 billion in total remittance inflows—a steep decline from previous years.
Why Are Crypto Remittances Dropping in El Salvador?
The plunge is largely attributed to Bitcoin’s price volatility. Between January and May 2025, BTC fluctuated between $93,907 and $108,949, creating uncertainty and risk aversion among Salvadorans.
Additionally, ongoing regulatory challenges and inconsistent market sentiment have contributed to the decline in crypto adoption for remittance purposes.
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Why El Salvador Backed Crypto Remittances in the First Place
El Salvador has long promoted crypto as a way to boost the economy. The government supported the adoption of Bitcoin and blockchain technology to tap into the $7 billion Central American remittance market.
By integrating crypto into remittance channels, the goal was to reduce dependence on traditional services like Western Union and cut high transaction fees, allowing more money to reach families in need.
However, despite these intentions, the current decline signals a failure to achieve meaningful adoption at scale.
Consequences of Crypto Remittance Decline
The falling numbers could have serious economic repercussions. A significant drop in crypto remittance inflows may impact:
- GDP growth
- Foreign exchange reserves
- Balance of payments
Still, there’s some optimism. Digital remittances overall are projected to reach $148.39 million in 2025, an increase from 2024, indicating potential growth in non-crypto digital transfers.
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FAQs
Crypto remittances are international money transfers facilitated by cryptocurrencies, using blockchain technology for direct, cross-border transfers between individuals, often bypassing traditional financial intermediaries.
Bitcoin’s price fluctuations create uncertainty and risk for Salvadorans who rely on stable income, leading to reduced crypto adoption for remittances and impacting their financial stability.
The falling crypto remittance numbers could negatively impact El Salvador’s GDP growth, foreign exchange reserves, and balance of payments, affecting families reliant on these funds.
