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Bitcoin price crashes 10% on first day as legal tender

·2-min read
Protestors in El Salvador against Bitcoin being introduced as legal tender.
Protests broke out in El Salvador against new laws introducing Bitcoin as legal tender (Source: Getty)

El Salvador has become the world's first country to accept Bitcoin as legal tender overnight, but the decision did not come without controversy.

Bitcoin was officially accepted as a legitimate currency in the South American nation on September 7 and will allow Salvadorans to use the crypto in physical and online shops.

One Twitter user even tested out the system, on what has been dubbed ‘Bitcoin Day’ by purchasing some McDonalds.

A Government-backed app, Chivo, was launched and citizens were encouraged to install it on their phones to buy goods and manage their newly acquired Bitcoin.

President Nayib Bukele revealed El Salvador had bought around 550 Bitcoin, worth around $35 million.

But, not all are happy with the introduction.

Protests began around the county in opposition to the laws which they said the Government did not consult the public on.

Additionally, protesters voiced concerns around Bitcoins volatility which they said could pose a serious risk to the economy.

Why did the price of Bitcoin plummet?

It’s hard to say. As mentioned above, Bitcoin will often see volatility and as soon as people start selling there are plenty more who start buying.

Even President Bukele, tweeted that he was ‘buying the dip’ when the coin began to fall.

Some Reddit users even suggested that if all 3,316,862 community members were to buy $30 of bitcoin each on Thursday, US$99,505,860 would be added to the cryptocurrency.

"Bitcoin is hammered today but if you look at the price action more closely you can see that traders have actually bought the dip as the price has bounced near its 50-day simple moving average," Naeem Aslam, chief market analyst at Ava Trade, told Yahoo Finance UK.

"In other words, today, we have tested the early 40Ks price level and it seems like that this could be last big fires sale opportunity we may have this year."

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