Bitcoin experienced its most volatile days of this year as the price of the currency fell by $9000 to around $47,200 today. The price crash comes just a few hours after El Salvador became the first country to officially adopt it as legal tender, the first in its 12-year history.
According to the Bloomberg Galaxy Crypto Index, the value of the coin went down more than 10% in the course of an hour just after it went above the highly anticipated $50,000 bar. The coin lost as much as 19% a few trading hours after.
Speaking on the crash, Stephane Ouellette, Chief executive and co-founder of FRNT Financial told Bloomberg that the reason may be unclear as “the market remains far more opaque and global than most if not all other notable asset classes.”
She however noted that the most probable reason may be “Mystery selloff”.
According to experts, often the legitimate reason for such selloffs may only be found after a significant period. Bitcoin is notorious for its volatility but the speed with which it had recouped in recent times and plunged in the past hours has taken many by surprise.
El Salvador in the mix…
Latin American nation, El Salvador became the first country in history to accept bitcoin as legal tender following the purchase of the first batch of today. El Salvador’s president, Nayib Bukele, tweeted that he’s buying the dip.
President Bukele later said that 150 new coins were added and that the country now holds 550 Bitcoin. He promised to buy “a lot more”
Following this, the government’s Bitcoin wallet, Chivo announced that it will provide an initial boost to adoption by giving users $30 pre-loaded worth of the currency per registration with a Salvadoran national ID number.
Analysts believe that this move had a significant rebound on the coin which rose to over $52,000 (almost 75% up since late July). Users on Twitter and Reddit were sharing plans to buy $30 worth of Bitcoin en masse today to mark El Salvador’s Bitcoin law coming into effect.
Other cryptocurrencies enjoyed a similar rise in prices today following the rally by bitcoin. According to CoinMarketCap, they are experiencing similar crashes at the moment. Cardano has lost about 15% value today; Dogecoin 20%, Ether, the second-largest digital asset, also dropped from $3,900 to about $3,000 in a few hours.
Maybe a matter of time…
Some commentators believe that the sudden rise and fall of digital currency may be owing to serendipity. The El Salvador event is a one-off event whose rarity is undeniable.
Some others say that Bitcoin is suffering from another “September stroke”. Data compiled from Bloomberg shows that September is the only month when Bitcoin has failed to deliver positive returns for the past 10 years.
The token has fallen during the month of September for at least six of the previous 10 years, losing more than 6% on average.
We are sure of today’s event. Whether the coin will live up to its bad spell will only be proven by time.
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