In what has been seen as one of the worst selloffs in recent times, the price of Bitcoin traded down on Wednesday to reach a sum of $46,400. This downward movement came at the same time El Salvador decided to adopt the token as the country’s official currency- making it the first nation in the entire world to make BTC legal tender.
While this should have been seen as a marked milestone for the cryptocurrency in its journey towards financial legitimacy, it was met with protests as citizens of the country were anxious that they would now have to be a part of this highly volatile currency.
Bitcoin Plunges As El Salvador Welcomes It As Tender
It can be readily seen that most people aren’t ready to discard the USD in favor of Bitcoin- despite the government of El Salvador going forward and legitimizing it. Almost a thousand people gathered in the capital, San Salvador, with one sign stating that this cryptocurrency would be bringing with it more poverty and corruption. A major part of this fear, and rightfully so, is attributed to BTC not being a stable currency.
This can be assumed seeing that no other fiat currency in the world that was backed by a national government would lose almost 9% in a day. Those fiat currencies that do are usually in badly mismanaged or war-torn countries. Most of the countries also have their currency exchanged in dollars- just like El Salvador.
Even in such a circumstance, several crypto backers have seen the adoption of Bitcoin by El Salvador as a turning point in the cryptocurrency sector. Matt Hougan, the CIO of Bitwise Asset Management has called it a ‘zero-to-one’ event. Before El Salvador took BTC up, there were no countries where a cryptocurrency was used as a legal tender.
One of the biggest concerns that investors have is the leverage that has been built into Bitcoin and other cryptocurrencies. Traders who buy futures in BTC may have to sell their positions when the price plunges.