Facebook Twitter

El Salvador added bitcoin as legal currency. But then everything fell apart

Why is bitcoin so low right now?

SHARE El Salvador added bitcoin as legal currency. But then everything fell apart
A unique QR code for Bitcoin payments.

A barber shop worker shows his shop’s unique QR code for Bitcoin payments, from the BitCoin Beach App, in Santa Tecla, El Salvador, Saturday, Sept. 4, 2021.

Salvador Melendez, Associated Press

El Salvador became the first country in the world to adopt bitcoin as a legal tender, but the move may have created a bitcoin crash, and the country has now hit a snag.

Per NBC News, El Salvador released the Chivo digital wallet on Tuesday, which allowed people to buy cryptocurrency. Each person in the country received $30 of bitcoin.

  • But soon after the app was released, residents couldn’t find it.

President Nayib Bukele said the El Salvador government had unplugged it to make sure the servers worked due to high demand.

  • He also blamed Apple, Google and Huawei for the delay, according to NBC News.

Why did bitcoin drop?

But what happened in El Salvador showed how volatile the cryptocurrency market could be. Per Quartz, the country’s bitcoin adoption day led to a huge crash on Tuesday morning, with prices falling by 17%.

  • In fact, $400 billion was wiped away in mere minutes because of the bitcoin crash.

Before the move, bitcoin had a value of about $50,000 per coin over the weekend. But that number dropped close to $43,000 after El Salvador’s move, according to Quartz.

However, experts told Quartz that the numbers will rebound. Such a huge surge in bitcoin investors — as well as an influx of people who decided to sell their bitcoin before and after the move of El Salvador — showed how volatile the market can be.

Did El Salvador ruin crypto?

Here’s the other thing — the drop from bitcoin may have ramifications for crypto tokens at-large. As Bloomberg reports, the drop “sent other digital currencies lower in sympathy” as people questioned their investments and support for cryptocurrencies.