Bitcoin hurts as authorized tender in El Salvador after chaotic debut

A sign reads: “Exclusive Bitcoin Register” in a Starbucks store that accepts cryptocurrency as a payment method in San Salvador, El Salvador September 7, 2021. REUTERS / Jose Cabezas

TOKYO, Sept. 8 (Reuters) – Bitcoin licked its wounds on Wednesday, a day after its worst losses in 2 1/2 months, as El Salvador’s historic legal tender adoption wreaked havoc online and on the streets.

The coin was last traded at $ 46,560 after enduring wild trade the previous day, hitting a nearly 4-month high of $ 52,956 before breaking 11.1%, the biggest drop since June 2nd.

Analysts said the sharp decline was partly due to investors who bought the El Salvador move rumor and are now selling the fact.

“I think there was some anticipation for this event (El Salvador), similar to what we saw before Coinbase was listed on the Nasdaq,” said Henrik Andersson, chief investment officer at Apollo Capital, a crypto asset fund in Melbourne, Australia.

At one point on Tuesday, the digital currency fell as much as 18.6%, wiping out more than $ 180 billion from the market.

It was a historic day for Bitcoin when El Salvador’s experiment to make it legal tender got off to a bumpy start.

Technological breakdowns hampered operations, while street protests broke out by suspicious citizens in the Central American country.

When bitcoin wobbled, Salvadoran President Nayib Bukele said his government bought another 150 bitcoins valued at around $ 7 million on Tuesday.

“That underscored the difficulty of protecting the value of Bitcoin as its own currency,” said Nana Otsuki, chief economist at Monex Securities. “The purchase didn’t seem effective in stopping the decline.”

Amid the trading frenzy, major US cryptocurrency exchanges Coinbase Global Inc (COIN.O), Kraken, and Gemini had to contend with delays in some transactions. All said their systems have since been restored.

Regardless, the U.S. Securities Commission has threatened to sue Coinbase Global if the crypto exchange continues with plans to launch a program that will allow users to earn interest by lending crypto assets.

Reporting by Hideyuki Sano, Anushka Trivedi; Editing by Sam Holmes

Our Standards: The Thomson Reuters Trust Principles.

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