Why is bitcoin dropping? ‘Very bad day’ for El Salvador bitcoin experiment | City & Business | Finance
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The price of bitcoin took a nosedive on September 8. After rising to more than $52,000 (£37,757.46) in value last week, prices have to around $45,000 (£32,674.72) on Wednesday. The value of bitcoin continues to fall as El Salvador’s experiment with the crypto results in a dip of almost 14 percent in its value.
Does this show the world isn’t ready to accept cryptocurrencies into the mainstream?
Bitcoin wasn’t the only victim of the latest slump.
Prices fell across the market with XRP Ripple, Ethereum and Cardano all dropping in value.
These falls have contributed to a $400billion (£290.44 billion) wipeout in the market overall.
READ MORE: Ethereum has ‘very high potential’ to overtake Bitcoin
Despite this, the most recent fall in bitcoin has been attributed primarily to a recent move by El Salvador’s government.
The price of Bitcoin on September 7 crashed to its lowest point in nearly a month, after El Salvador officially announced it to be a form of legal tender.
At the same time, this caused the price of other cryptos to spiral downwards.
On the first day of El Salvador adopting Bitcoin as legal tender, investors were met with technological glitches as servers couldn’t keep up with user registrations.
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Initially, platforms such as Apple and Huawei weren’t offering the government-backed digital wallet called Chivo.
Later on in the day, Chivo began to appear on more platforms.
After a rocky start, Chivo started to be accepted by retailers such as Starbucks and McDonald’s.
Opposition politician Johnny Wright Sol told the BBC: “It was a very bad day for President Bukele, his government and his Bitcoin experiment,”
He added: ”The majority of the population knows very little about cryptocurrencies. What we do know is it’s a very volatile market. Today that was surely made manifest.”
Neil Williams, lawyer at Reeds Solicitors LLP and cryptocurrency tax expert said the reluctance to accept cryptocurrencies into the mainstream continues to spark volatility in the market.
He told Express.co.uk: “The inherent volatility of Bitcoin and by extension other crypto assets, should be tempered by the introduction of mainstream acceptance, yet there is still an unknown which can send jittery ripples in the markets.
“El Salvador’s position may pave the way for others to take the plunge, which may, in turn, see a shift in crypto markets starting to behave in a more mainstream way.
“Theory may well support this, however, practice is likely to have its own say.”
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