As El Salvador enthusiastically welcomed Bitcoin as legal tender, Bitcoin markets showed their worst side and fell in value. Bitcoin’s value against the US dollar fell by up to 20% during the day’s trading before recovering slightly.
Expectations were high as El Salvador became the first country to accept Bitcoin, and the value of Bitcoin was expected to rise. Apart from the country driving demand for the popular crypto coin, social media campaigns aimed at purchasing Bitcoin in support of the country’s decision were launched.
On September 7, El Salvador will officially begin using #Bitcoin as its national currency alongside the U.S. dollar. Every cyber hornet 🐝 I know is planning to buy $30 in BTC tomorrow in solidarity with the people of #ElSalvador and their leader @nayibbukele. Will you join us?
— Michael Saylor⚡️ (@michael_saylor) September 6, 2021
However, the simultaneous purchase of coins appears to have harmed crypto exchanges, with many reporting “errors” and “delays,” according to Reuters. Even El Salvador’s grand experiment had teething problems, with President Bukele himself directing app stores to make the apps available to the public.
— Nayib Bukele 🇸🇻 (@nayibbukele) September 7, 2021
People were able to access the government-backed Chivo app and make Bitcoin purchases throughout the day. However, the crypto coin’s value had already begun to fall.
El Salvador had purchased 400 Bitcoin the day before, raising the value to $53,000, a high since May of this year. Bitcoin, which had been trading around $50,000 earlier in the day, fell sharply to $42,900 in about two hours, according to BGR. That was a nearly 20% drop in value, which erased the value by $10,000 in a single day. The precise cause of the drop is unknown.
However, this is not the first time Bitcoin has experienced a crash. The currency lost 99 percent of its value in its early days due to hacks at a coin exchange. As the coin recovered to record highs of $20,000 in 2017, the bubble burst at the end of the year, resulting in an 84 percent drop in value. Last year, the pandemic wiped out the coin’s value by 50%, and just as it was reaching new highs, Elon Musk broke his promise to accept the coin for Tesla vehicles, and China clamped down hard on mining operations, causing the coin’s value to plummet by another 50%.
As the day progressed, Bitcoin recovered slightly to trade around the $47,000 mark, only to fall back to the $45,000 mark at the time of writing. Unfazed by the drop, President Bukele sought out opportunities and purchased more Bitcoin at a lower price.
It appears the discount is ending 🥲
Thanks for the dip @IMFNews.
We saved a million in printed paper.El Salvador now holds 550 bitcoin.
The Bitcoin experiment continues.