The price of bitcoin fell on Tuesday after surpassing the final $ 52,000 on Monday, reaching its highest level since May.
The price action will take place on the day that El Salvador adopts the largest cryptocurrency by market capitalization as the legal tender currency, becoming the first country to do so. Bitcoin fell to 16% on Tuesday morning. According to Coin Metrics, it fell about 10% and traded at $ 46,860.
Adjacent cryptographic stocks Microstrategy and Coinbase also fell by approximately 6% and 3.5%, respectively. Coinbase users experience delayed or canceled transactions at “high rates”, change encryption he said in an update on Twitter late in the morning. Kraken, another major cryptocurrency exchange, said at the same time it is investigating delays for users using instant financing methods as well as failed card payments.
In the early hours of Tuesday, the country disabled Chivo, its government-run bitcoin portfolio, to increase server capacity, making it difficult to install new users, El Salvador President Nayib Bukele said. announced in a tweet around 7:00 am EST.
“All data attempting to enter at this time will give an error”, He said. “This is a relatively simple problem, but it cannot be solved with the system connected.”
The market share is not surprising, according to Leah Wald, CEO of Valkryie Investments, who said the news had a significant price in the market “some time ago.”
“When this move was announced, it didn’t have as big an impact on price as some might have expected, possibly because El Salvador’s population is lower than New York City’s, but also because the announcement went be poorly detailed and people were on the fence about how it would be implemented, “he told CNBC, noting that much of El Salvador lives in poverty and does not need access to the Internet or smartphones to participate. on the bitcoin network. “Transaction rates, processing times and other hurdles also make this feel more like a beta test than as a solution to many of the problems affecting the country’s poor,” he added.
As part of the new law, companies will have to accept bitcoins for goods and services, although traders who are not able to accept technologically will be exempt. The government has installed 200 Bitcoin ATMs in El Salvador. He also bought 400 bitcoins worth about $ 20 million and is loading Chivo wallets worth $ 30 bitcoins for Salvadorans who sign up.
Some traders say on social media that they will buy Bitcoin worth $ 30 in their local trust currencies to commemorate and support El Salvador’s new law at 3 p.m. EST. But bitcoin prices fell until the afternoon anyway.
“What’s most worth looking for is whether neighboring countries in Latin America or other countries in the world are starting to adopt bitcoin as their national currency as well,” Wald said. “If that were to happen, that’s when we could see a higher parabolic movement, as the momentum gained by many millions more people with instant access to cryptography should lead to more adoption, more HODLing and higher prices.”
Proponents of Bitcoin have long argued that there is a strong case for Latin American markets that use cryptocurrency as a medium of exchange, for remittances, and even for central banks that experience high monetary depreciation.
On Monday, Panamanian politician Gabriel Silva introduced the “Cryptography Act” that “seeks to make Panama a country compatible with the blockchain, cryptographic assets and the Internet,” he said on Twitter. “This has the potential to create thousands of jobs, attract investment and make government transparent,” he added.