Make Kitco Your Homepage

Bitcoin price sees 10k swings as cryptocurrency becomes legal tender in El Salvador

Kitco News

(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.

Saylor even asked other bitcoin bulls to buy an additional $30 of BTC to support El Salvador.

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.

El Salvador’s leader did warn of some volatility ahead and told its citizens to stay focused.

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University Institute of Public Opinion (Iudop) showed that seven out of ten citizens believe the Bitcoin Law should be repealed.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.

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.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.