As El Salvador warmly welcomed Bitcoin as legal tender in the country, Bitcoin markets showed their worst side and tumbled in value. The value of the Bitcoin against the US dollar fell as much as 20 percent in the day's trading, before recovering back a little.
As El Salvador became the first country to accept Bitcoin, expectations were high and Bitcoin value was expected to rise. Apart from the country pushing the demand for the popular crypto coin, social media campaigns were aimed at purchasing Bitcoin in support of the country's decision.
On September 7, El Salvador will officially begin using #Bitcoin as its national currency alongside the U.S. dollar. Every cyber hornet 🐝 I know is planning to buy $30 in BTC tomorrow in solidarity with the people of #ElSalvador and their leader @nayibbukele. Will you join us?— Michael Saylor⚡️ (@michael_saylor) September 6, 2021
However, the simultaneous buying of coins seems to have affected crypto exchanges with many reporting "errors" and "delays", Reuters reported. Even El Salvador's grand attempt faced teething issues, with President Bukele himself prompting app stores to release the apps to the public.
As the day progressed, people were able to access the government-backed Chivo app and make purchases in Bitcoin. But the fall in the value of the crypto coin had already begun.
The previous day, El Salvador had purchased 400 Bitcoin taking the value up to $53,000, a high since May this year. As the day progressed, Bitcoin that had been trading around the $50,000 mark fell sharply to $42,900 in about two hours time, BGR reported. That was almost a 20 percent dip in value, which erased the value by $10,000 within a day. The exact cause of the dip is not known.
However, this is not the first crash that Bitcoin has seen. In its early days, the currency has lost 99 percent of its value due to hacks at a coin exchange. As the coin recovered to then record highs of $20,000 in 2017, the bubble burst at the year-end with an 84 percent crash in value. The pandemic erased the value by 50 percent last year, and just when the coin made some record gains, Elon Musk went back on his word of accepting the coin for Tesla cars and China came down heavily on mining operations, crashing its value by over 50 percent once again.
As the day progressed, Bitcoin did somewhat recover to trade at around the $47,000 mark but then fell again to the $45,000 mark at the time of this writing. Unperturbed by the dip, President Bukele sought opportunity and bought more Bitcoin at a lower value.
The experiment with Bitcoin continues.