Bitcoin plunged 10% in hours, as the cryptocurrency market lost $300 billion in overall market cap. The global cryptocurrency market capitalization dropped to $1.9 trillion, almost 15 percent less than it was on Monday morning, with $410 billion in total value lost, according to crypto-data website CoinMarketCap.
The price of bitcoin fell 15% to $43,000, the lowest price in almost three weeks, before rising back to $46,810. Meanwhile, Ethereum, Binance Coin, and Cardano fell between 13% and 18% each, while Solana was the only crypto that posted a gain in value, rising 8% over the course of the previous week following an impressive growth of over 36%.
El Salvador’s Bitcoin Rollout
El Salvadoran President Nayib Bukele said the government has purchased an extra 150 bitcoins after the flash crash, effectively buying the dip. El Salvador raised its total BTC holdings to 550 bitcoins, worth approximately $25 million.
Buying the dip 😉
— Nayib Bukele 🇸🇻 (@nayibbukele) September 7, 2021
The El Salvadoran economy was knocked down a peg early Tuesday when the new e-wallet run by President Bukele was rendered unusable, and Bukele was forced to declare that it would be going down temporarily. All the world’s major cryptocurrency exchanges—including Coinbase, Kraken, and Gemini—saw short outages and trading delays as trade volume spiked.
A key factor in the market’s rapid turn was the instance of “buy the rumor, sell the news” in El Salvador since the country just adopted Bitcoin as a legal currency. Bitcoin’s price soared to heights not seen since May’s market-wide collapse as traders anticipated the next move.
El Salvador’s Adoption of Bitcoin as Legal Tender
Previously, the legislation was passed by Congress during the administration of President Nayib Bukele. Bitcoin has become a well-known kind of money with respect to pricing, taxes, and tax exemptions on capital gains. According to the head of the Digital Chamber of Commerce, the volatility of Bitcoin will eventually diminish.
Bitcoin has been critiqued due to its price volatility. As far as the future of bitcoin as a legal currency in El Salvador is concerned, its outcome is completely up in the air. The new legislation would put the value of the US dollar in the hands of the market, not the central bank. The US dollar is the legal tender of El Salvador now.
The law also states that the state would promote public usage of bitcoin transactions by promoting the required skills and methods.