While the Bitcoin was introduced as the official currency in El Salvador, the price of the cryptocurrency fell significantly. After the Bitcoin was still worth 44,000 euros on Monday, it is now only around 39,000 euros.
On Tuesday, El Salvador was the first country in the world to introduce Bitcoin as an official means of payment. So far, the Central American country has only used the US dollar as its currency, but Bitcoin will be available as a second option in the future. The citizens of the country should be able to make the switch palatable with a bonus: If you download Chivo, the country’s wallet, you will receive a starting credit of 30 US dollars.
Loss of value at the start
The claim that cryptocurrencies like Bitcoin can be an “anchor” for countries with weak economies or fluctuating currencies has been around for a long time. However, just in time for the start in El Salvador, it showed that Bitcoin itself is also affected by strong fluctuations. At the beginning of the week, the Bitcoin price reached more than 44,000 euros. But just in time for the introduction of the currency, at 6 a.m. local time, the Bitcoin price plummeted from $ 43,000 to $ 39,000. It has not increased significantly since then.
It cannot be said with certainty whether (only) the introduction of the currency in El Salvador is the cause of the loss in value. It is noticeable, however, that other crypto currencies such as Monero or Ethereum also fell significantly at the same time. On Monday, for example, Ethereum was € 3,300, now it’s only € 2,950. It is feared, for example, that the introduction as an official means of payment could result in additional regulations for crypto currencies.
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It is also hard to predict whether El Salvador’s crypto course will be worthwhile in the long term. The country’s president hopes that this will save US $ 400 million by eliminating transfer fees. On the other hand, the recent price slide is unlikely to have boosted public confidence in Bitcoin. In addition, the country’s creditworthiness was downgraded by the rating agency Moody’s after Bitcoin was announced as the official means of payment.
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