CryptocurrenciesBitcoin Falls Nearly 10% as El salvador Adopts it as a Legal Tender

Bitcoin Downward Price Chart

The price of bitcoin fell Tuesday after breaking through $52,000 late Monday, reaching its highest level since May. The price action comes as El Salvador adopted the largest cryptocurrency by market capitalization as legal tender, becoming the first country to do so.

Bitcoin dropped as much as 16% on Tuesday morning to $46,892.04. The digital currency is currently trading at $ 45,440.23 as of 10.30 A .M East African Time a 13.12% 24-hour decline.

Consequently, Ether the second-largest cryptocurrency by market capitalization fell 14.40% to $3,333.84 on Wednesday.

Bitcoin chart
Bitcoin Performance Chart

Early Tuesday El Salvador temporarily disabled Chivo, its government-run bitcoin wallet, to increase the capacity of the servers, which were hindering new users from installing it, President Nayib Bukele announced in a tweet at about 7:00 a.m. EST.

“When this move was first announced, it didn’t have nearly as big of an impact on price as some may have expected it might, possibly because El Salvador’s population is less than New York City’s, but also because the announcement was light on details and people were on the fence about how this was going to be implemented. Transaction fees, processing times, and other hurdles also make this feel more like a beta test rather than a solution to many of the problems plaguing the country’s poor economy” Leah Wald, CEO at Valkyrie Investments,

As part of the new law, businesses are required to accept BTC for goods and services, though merchants who aren’t technologically able to accept bitcoin will be exempt. The government has installed 200 bitcoin ATMs around El Salvador. It also bought 400 bitcoins worth about $20 million and is preloading Chivo wallets with $30 worth of bitcoin for citizens who register.

Additionally, Crypto adjacent stocks MicroStrategy and Coinbase also lost about 9% and 4%, respectively. Coinbase users were experiencing delayed or cancelled transactions at “elevated rates” in the morning, the company said in an update on Twitter. Major crypto exchanges Kraken and Gemini were also investigating delays and performance issues.

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