Bitcoin Crashes After El Salvador Declares Bitcoin as Legal Tender

With El Salvador becoming the first country in the world to accept Bitcoin as a legal currency, speculation is rife that other countries, particularly Latin American ones, may follow suit.

Yesterday, El Salvador became the first ever country to accept Bitcoin as an official currency.  The trial probe will be closely monitored by both the supporters and opponents of cryptocurrencies. It is anticipated that a substantial number of people would want to deal with Bitcoin when the US dollar coexists, and it benefits the country’s harsh, underfunded economy.

Before the debut, the government has funded 400 BTC, which is worth nearly $20 million at prevailing market prices. After the acquisition of about 200, President Nayib Bukele announced on Twitter that the country intends to purchase “plenty more.”

On the other hand, other countries have clearly ruled out the possibility of BTC gaining equal standing to the nation’s official currency.

Russia, for example, has stated that using BTC as legal cash would be damaging the economic growth of the country.

Furthermore, this coincides with the International Finance corporation Fund’s admonition to El Salvador.

The organization indicated in July that the nation’s central bank may lose all control of fiscal policy and interest setting authority. It further predicted that the state’s worth of products and services might become volatile, with “tremendous” price fluctuations.

Bitcoin price plunge

Bitcoin has plummeted just hours after El Salvador declared it as a legal currency.

BTC dropped from $50,767.43 to $44,672.66 in less than an hour. It is reflecting a 12 % decline on the chart.

It is among the worst hourly performances witnessed this year, surpassed only by a bruising session in May, when Bitcoin fell 14.4% within a day’s time.

The crash will undoubtedly put a fog over Bitcoin Day, causing concern among Salvadoran customers who are being pushed to use the currency to spend for mundane tasks.

The state’s principal Chivo app was also hit by technical glitches a few hours earlier, forcing it to be pulled down for the time being.

El Salvador’s president, Nayib Bukele, has tried to put a positive spin on the matter, declaring that his administration is “purchasing the dip” by increasing 150 bitcoins to its holdings.

Experts have commented that a digital currency can never replace a fiat. However, some believe that this could be the start of a new age. The exact result will reflect in El Salvador’s financial performance in the coming months.

David Cox

David is a finance graduate and crypto enthusiast. He projects his expertise in subjects like crypto and Blockchain while writing for CryptoNewsZ. Being from Finance background, he efficiently writes Price Analysis. Apart from writing, he actively nurtures hobbies like sports and movies.

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