On Tuesday, El Salvador legally recognized the use of Bitcoin as a national currency. The internet was flooded with mixed reactions.
As the world watched the announcement unfold, something even more interesting and somewhat strange was unfolding.
Twitter campaigns with the hashtag #7SeptemberBuyBTC urged crypto fans to buy $30 worth of Bitcoin. This move was to support the official use of Bitcoin in El Salvador.
The idea was to get more people to buy Bitcoin and thus increase its price. Unfortunately, things didn’t quite go according to plan. Other digital assets also suffered price drops.
Bitcoin prices plummeted
The brief experiment caused the Bitcoin price to plummet on Tuesday.
Currently, Bitcoin is worth about $46,250, down from $52,000 yesterday.
Ethereum – the world’s second-largest cryptocurrency – had risen 16% over the past week, only to see it plummet on Tuesday.
Solana, another digital token, suffered a major blow after its price surged 69% in recent weeks.
There’s no explanation for the drops, but one thing is for sure – you can’t blame them on the misfortune of El Salvador’s digital wallets. The Latin American country only made Bitcoin its national currency. No other digital currency was mentioned.
So why the plunge in the price of other cryptocurrencies? A mix of better access for investors, blind faith, and low interest rates are responsible.
A few factors that can shake crypto prices
Coinbase’s prices rose after its IPO in April, which saw retail investors buying cryptocurrencies on a massive scale.
Also, many people are using the digital market network Ethereum. Therefore, anything can affect their prices (positively or negatively).
The bogus world of NFTs is another factor that drives up crypto prices.
In other words, none of the price drops are only related to the introduction of Bitcoin as a national currency in El Salvador.
But the fact that bitcoin prices fell so sharply on Tuesday shows that bitcoin’s success is now dependent on events iin El Salvador. And that spells doom for virtual coins.
Currently, El Salvador has only 400 Bitcoins. Many Salvadorans are still against the use of BTC as the official national currency.
What does this mean for us? The use of Bitcoin will be low in the near future. So in the short term, Bitcoin might not do as well as some critics (and the president) expect. However, cryptocurrencies are a volatile market. In the long run, Bitcoin can still go up.