Bitcoin price sees 10k swings as cryptocurrency becomes legal tender in El Salvador
(Kitco News) El Salvador made history on Tuesday as it became the first country to adopt bitcoin as legal tender. But bitcoin’s price reacted to the milestone with its usual unpredictability – at one point, plunging 17% on the day.
To prepare for the big day, the country’s President Nayib Bukele bought 400 bitcoin worth more than $20 million.
Bukele revealed the latest purchase in a series of tweets on Monday.
On top of being able to pay with bitcoin in El Salvador, each citizen that registers with the nation’s wallet app called Chivo will receive $30 worth of bitcoin.
Many key figures in the crypto space encouraged and congratulated El Salvador, including MicroStrategy CEO Michael Saylor and Binance CEO Changpeng Zhao.
So far, only 1 country in the world uses #crypto as legal tender. Just the beginning.— CZ ?? Binance (@cz_binance) September 7, 2021
Saylor even asked other bitcoin bulls to buy an additional $30 of BTC to support El Salvador.
On September 7, El Salvador will officially begin using #Bitcoin as its national currency alongside the U.S. dollar. Every cyber hornet ?? I know is planning to buy $30 in BTC tomorrow in solidarity with the people of #ElSalvador and their leader @nayibbukele. Will you join us?— Michael Saylor?? (@michael_saylor) September 6, 2021
Bitcoin saw wild $10,000 price swings on Tuesday. First, the popular cryptocurrency surged to nearly $53,000 on the El Salvador news but then plunged and hit a low of $42,921.27. At the time of writing, bitcoin was trading at $46,749.90, down 9.43% on the day.
The bitcoin rollout did see some hiccups as the Chivo wallet app was not available on popular app stores, with Bukele saying that the government had to temporarily unplug the digital wallet to cope with surging demand.
Bukele tweeted out his frustration with Apple, Google and Huawei:
But despite the first-day snags, people were out on the streets testing the new system and successfully paying with bitcoin at McDonald’s and coffee shops.
Just walked into a McDonald's in San Salvador to see if I could pay for my breakfast with bitcoin, tbh fully expecting to be told no.— Aaron van Wirdum (@AaronvanW) September 7, 2021
But low and behold, they printed a ticket with QR that took me to a webpage with Lightning invoice, and now I'm enjoying my desayuno traditional! pic.twitter.com/NYCkMNbv7U
Flawless experience using @MuunWallet here in El Zonte to buy all sorts of things with Bitcoin ??— Alex Gladstein ?? ? (@gladstein) September 2, 2021
If you visit, make sure to stop by for a coffee with Karla, an excellent barista.
You can tip her instantly from anywhere in the world with Lightning here:https://t.co/qFWYI0bt4e pic.twitter.com/ruyBLWrRy7
El Salvador’s leader did warn of some volatility ahead and told its citizens to stay focused.
Incoming FUD!— Nayib Bukele ???? (@nayibbukele) September 6, 2021
Tons of it.
Bukele added that making bitcoin legal tender will save Salvadorans living abroad millions of dollars in commissions when they send money back home.
Last week, to help with the conversion of bitcoin into U.S dollars, the nation’s Congress passed a law to create a $150 million fund.
But Salvadorans are still skeptical of the move. The latest survey from the University Institute of Public Opinion (Iudop) showed that seven out of ten citizens believe the Bitcoin Law should be repealed.
As bitcoin plunged on, crypto critics commented on El Salvador’s decision.
“Your national ‘currency’ just lost over 15% of its purchasing power in under an hour. Get use to it,” said prominent gold bull Peter Schiff, who is also chief market strategist of Euro Pacific Asset Management.
Welcome to #Bitcoin #ElSalvador. Your national "currency" just lost over 15% of its purchasing power in under an hour. Get use to it. Just another perfectly orchestrated pump-and-dump by the Bitcoin whales. Too bad this time they had to sacrifice an entire nation to pull it off!— Peter Schiff (@PeterSchiff) September 7, 2021
Instead of embracing #Bitcoin, @nayibbukele should embrace freedom. #ElSalvador currently ranks 94th on @Heritage's Index of Economic Freedom. Not the most unfree nation in the world, but a lot of room to improve. So cut government spending, repeal regulations, and lower taxes!— Peter Schiff (@PeterSchiff) September 7, 2021
Mark Mobius, co-founder at Mobius Capital Partners, also commented on the move, stating that El Salvador is “grasping at straws with bitcoin.”
He told Bloomberg on Tuesday: “El Salvador is on its back. It’s got real problems. It is a bankrupt country. They are grasping at straws with bitcoin, but I don’t think it will spread to other countries. Maybe a few other countries that have financial problems will adopt it. But I don’t think this is going too far. It is not convenient, and it is risky.”