Bitcoin Price Reduces by nearly 10% on the day El Salvador Adopts it as Legal Tender


The value of bitcoin decreased on Tuesday after crossing through $52,000 on late Monday, reaching its peak level in the month of May.

The price action comes on the day El Salvador is positioned to adopt Bitcoin as legal tender, thereby becoming the first country to do so. The value of Bitcoin dropped a maximum of 16% on Tuesday morning. At the end of the day, it was down by 9.5% and was trading at $46,892.04, as per Coin Metrics.

Crypto adjacent stocks Coinbase and MicroStrategy also lost about 4% and 9%, respectively.

Leah Wald, CEO at Valkyrie Investments said that the market action is unsurprising.

She expressed, “When this move was first announced, it didn’t have nearly as big of an impact on price as some may have expected it might, possibly because El Salvador’s population is less than New York City’s, but also because the announcement was light on details and people were on the fence about how this was going to be implemented.”

Wald said, “What is most worth looking out for is whether or not neighboring countries in Latin America, or those elsewhere around the world, begin to adopt bitcoin as their national currency as well. Should this occur, that is when we could see a parabolic move higher, as the momentum gained from many millions more people having instant access to crypto should result in more adoption, more HODLing, and higher prices.”

HODLing is cryptocurrency community slang for the strategy related to buy-and-hold investment.