Bitcoin price drops on 1st day of official use of cryptocurrency in El Salvador

It’s a volatile day for bitcoin, which briefly dropped more than 10% this Tuesday (7) – below the US$43,000 mark.

The drop comes after El Salvador implemented the plan announced in June and adopted cryptocurrency as its legal currency, becoming the first country in the world to do so.

The measure received some criticism in El Salvador, where people protested, as well as abroad.

“The country needs a stable monetary system and an efficient payment system. As the government or bank of El Salvador would not create a digital currency for the central bank, it makes more sense for them to adopt another major stable digital currency, whether it is offered centrally or decentrally,” said Will Cong, finance professor from Cornell University in email comments.

Even so, adoption as legal tender was, in principle, good news for the spread of bitcoin. But cryptocurrency tumbled on Tuesday as the “buy the rumor, sell the news” phenomenon related to Salvadoran politics is finally emerging, said Edward Moya, senior market analyst at Oanda.

The Central American nation had previously purchased 200 bitcoins, and bought another 200 late Monday night, before formal adoption, and another 150 on Tuesday, bringing the country’s total to 550 bitcoins.

The country will also give residents $30 in bitcoins by downloading the Chivo state wallet app to encourage citizens to try cryptographic payments.

Bitcoin traded at nearly $53,000 per currency on Monday in Salvadoran activity.
With the opening of the New York Stock Exchange on Tuesday, the digital currency was more or less stable and, around noon, dropped to a 24-hour low of $42,921, according to data from CoinDesk .

Salvadoran President Nayib Bukele, a right-wing populist who rose to power in 2019, tweeted around noon that he was “buying the retreat.”

Even though encryption came off its lows, it was dropping about 9.5% by mid-afternoon. Bukele tweeted before that “it looks like the discount is running out”.

*Text translated from English. To read the original, click here