Bitcoin plunged as much as 17% to its lowest level in a month amid news El Salvador’s cryptocurrency roll-out was faltering.
The largest cryptocurrency fell as low as $43 050 in New York Tuesday, tumbling more than 10% in the course of an hour after it had broken above the the closely watched $50 000 level. The Bloomberg Galaxy Crypto Index, which tracks some of the largest cryptos, lost as much as 19%, while other smaller digital assets also sold off. Dash and ethereum classic plunged roughly 20% each.
The retreat on Tuesday comes as bitcoin faces one of its biggest test in its 12-year history as El Salvador became the first country to adopt it as legal tender on Tuesday.
Users on platforms including Twitter and Reddit were discussing plans to buy $30 worth of bitcoin en masse on 7 September to mark El Salvador’s bitcoin law coming into effect. The potential coordinated price pump echoes previous online campaigns targeting meme stocks like GameStop.
Both enthusiasts and detractors of cryptocurrencies are monitoring the experiment to see if a significant number of people want to transact with bitcoin when it circulates alongside the US dollar, and whether it brings any benefits to the violent, impoverished Central American nation.
If the experiment is a success, other countries may follow El Salvador’s lead. Its adoption will get an initial boost from the government’s bitcoin wallet, Chivo, which comes pre-loaded with $30 worth of the currency for users who register with a Salvadoran national ID number. The government disconnected the wallet early on Tuesday to sort out technical glitches and said they are running tests to make it available for download later in the day. — Reported by Vildana Hajric, (c) 2021 Bloomberg LP