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Bitcoin becomes an official currency and crashes

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Bitcoin

El Salvador’s reserves now include Bitcoin.  El Salvador bought 400 Bitcoin, approximately $20.9 million a day before it made history by becoming the first country to make Bitcoin a legal currency.  The buzz around El Salvador’s wallet app, Chivo has many Salvadorans signing up to collect their $30 worth of Bitcoin.  The early price action over the weekend helped Bitcoin make a run towards $53,000, but prices have turned negative.

Bitcoin is lower on a “buy leading up to the big event, sell the fact” reaction to El Salvador’s historic moment embracing Bitcoin.  What accentuated this moment was MicroStrategy CEO and prominent Bitcoin proponent Michael Saylor’s encouragement for cryptocurrency traders to buy $30 in BTC in solidarity with El Salvador.  Social media platforms were very cautious over the weekend that a plunge could occur following El Salvador’s big day.

New interest from Steph Curry, one of the greatest NBA shooters of all time shows interest is still brewing in the cryptoverse, but we could be at a tentative euphoria stage, which means volatility could swing in either direction.

Extreme froth in the NFT market is also another red flag for the entire crypto space.  NFTs are here to stay, but this second round of explosive growth will draw some hesitancy that these surging valuations will hold.

Bitcoin crashed early in New York to $43,109 but has rebounded back towards $46,800.

Bitcoin’s fundamentals remain intact, as prices iron out a new trading range between the $46,000 and $53,000 levels.   Until the Fed releases its paper on digital currencies, Bitcoin will likely remain rangebound.

 

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
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