Key Takeaways
- Bitcoin crashes 17% on Tuesday as El Salvador officially launches the token as legal tender
- The steep decline wiped out $400bn in market value but later investors pared some of the losses
The digital asset market endured a steep decline on Tuesday as increased selling momentum wiped more than $400bn from the market capitalization. Bitcoin plunged more than 17%, or nearly $9,000, to briefly trade just below $43,000.
El Salvador’s Bitcoin Debut
The staggering drop in the valuation of digital assets coincided with the rollout of bitcoin as legal tender in El Salvador. Bitcoin’s launch as a means of payment among Salvadorans, however, has faltered, which partly helped pressure the digital asset market.
In attempts to resolve technical issues, the government of El Salvador disconnected the crypto wallet that is used for bitcoin payments, President Nayib Bukele said on Tuesday. El Salvador’s bitcoin wallet, called Chivo, is loaded with a $30 gift in bitcoin for anyone who signs up with their Salvadoran national ID number.
Nayib Bukele Buys the Dip
In the middle of the crash, El Salvador’s President Nayib Bukele took to Twitter to announce his country has added 150 new coins to an already existing stack of 400 tokens, bringing total bitcoin holdings to 550, or about $25 million.
Bitcoin’s price later pared some of the losses but remained under heavy pressure following the significant selloff. The leading token finished Tuesday’s action near $47,000, down about 9% on the day.
Crypto Market Remains Under Pressure as Solana Survives the Plunge
Other major cryptocurrencies also suffered a heavy blow yesterday. Ether, the second-largest coin, plummeted $936, or 24%, to reach a session low of $3,013. Prior to the drop, the Ethereum blockchain’s native coin was trading at a three-month high above $4,000.
Solana’s SOL digital currency was the only coin in positive territory during yesterday’s deep dive. SOL’s price was hovering near $180 throughout the day, or an upside swing of about 10% on the day. Earlier on Tuesday, SOL reached an all-time record of nearly $200.
The Bitcoin Outlook
Earlier in the week, the price of bitcoin had just peaked above $53,000. The milestone was last seen nearly four months ago. The drop on Tuesday ended bitcoin’s solid run of six straight days of gains and the slide brought the price back to levels from late August.
During the early trading hours of Wednesday’s session, bitcoin’s price turned lower again after crypto traders failed to stage a comeback. Presently, bitcoin is trading near $45,000, or about 3.5% lower on the day so far.
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