A colossal spike in instability of the cryptocurrency market sunk the values of widespread virtual coins such as Bitcoin and Ether. On Wednesday, the virtual coin market was painted in red after cryptocurrency prices dropped a day before because of the delays in trading.
On Tuesday, El Salvador became the first country in the world to accept bitcoin as legal tender. The country took the landmark decision despite widespread domestic scepticism and international warnings regarding risks it welcomes to the consumers.
Bitcoin prices dropped from more than $52,000 per coin, i.e., over 17%, to $42,000. However, before recovering about half of that loss, El Salvador became the first country in the world to adopt Bitcoin as legal tender on Tuesday. Nevertheless, the rollout tripped in its first hours and the president of El Salvador, Nayib Bukele, said that the digital wallet used for transactions in Bitcoin stopped functioning.
Not surprisingly, Tuesday's selloff can be considered one of the most significant breaks in the rebound that helped lift Bitcoin to almost 75% since late July. CoinGecko's overall crypto currency market value fell to $300 billion in the past 24 hours.
The world's largest cryptocurrency staged a slight recovery since the prices of Bitcoin were at around $46,757, i.e., down 11% on Wednesday. In the meantime, other digital coins such as ether, following the lead, fell over 11% to $3,471. Similarly, the prices of dogecoin and Cardano also plunged to 15% and 12% to $0.26 and $2.5, respectively. Additionally, the prices of Stellar, Uniswap, XRP also crashed in the range of 15-20% within the last 24 hours.
Edward Moya, the Senior market analyst at Oanda Corp. Edward Moya, wrote in a note, “Social media platforms were very cautious over the weekend that a plunge could occur following El Salvador’s big day,". Bloomberg reported this information. Further, it is also likely that some investors bought in anticipation of the nation's implementation of its Bitcoin law on Sept. 7 and then moved to “sell the fact," he Mayo.
Experts suggest that bitcoin was still in the bull market as long as the price remained above the $43,000 level.
Billionaire, chief executive officer of Galaxy Digital Holdings and a long-time cryptocurrency bull, Mike Novogratz, told Bloomberg that the market for digital coins such as Bitcoin and Ether, etc., was running strong over the last eight weeks it exponentially became overbought. He also added that interest from individual investors spiked on the back of large institutions that jumped straight on board to the crypto wagon.
The author of “Attack of the 50 Foot Blockchain", David Gerard, told the Associated Press that Tuesday’s Bitcoin volatility had little or nothing to do with the landmark decision made by El Salvador. He further added, “My first guess was shenanigans, because it’s always shenanigans," via email to Associated Press.
Gerard also added, “Bitcoin basically doesn’t respond to market forces or regulatory announcements," “that sort of price pattern, where it crashes hugely in minutes then goes back up again, is usually one of the big guys burning the margin traders." Gerard said.
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