Mark Weaden
The long-awaited move to adopt Bitcoin as legal tender has been met with a flash crash for major coins like Bitcoin and Ethereum.
The very same day Bitcoin becomes legal tender we see a 17% drop in Bitcoin and Ether, with Bitcoin dropping to as low as $44,000 just after we saw many major currencies climb to their highest for over 2 months.
BTC was trading at around $52,000 before it plummeted back down. Ether was at $4,000, not far off its all-time high, before dropping to as low as $3,200. We are now starting to see the markets regain some traction in the market, but things are moving slowly.
The legalization of Bitcoin in El Salvador has been a contentious point. There are many claiming it to be a stunt to gain global attention, while others speculate it is a positive move for the country, which may bring much-needed economic prosperity to a country that has struggled for so long.
What do Salvadorians think of the adoption of Bitcoin?
The motive for President Nayib Bukele to adopt cryptocurrency remains unclear, though it is said that the adoption is to help combat continued hyper-inflation. Leading up to the launch of Bitcoin as legal tender, El Salvador purchased 400 bitcoins, worth some $20 million dollars, with the intention of purchasing more as the project develops.
For now, there is still much work to be done. A recent poll found that some 75% of Salvadorians are unsure whether the plan is going to benefit them. The adoption of cryptocurrency into a nation with very little financial and economic infrastructure is a difficult task, especially given that the majority of the population has little to no knowledge of how cryptocurrency functions.
El Salvador is working with crypto unicorn BitGo to help develop its official Bitcoin wallet. It’s still early days and too difficult to predict how things will unfold in the coming months. We also expect the markets to quickly stabilize.
