A positive week of cryptocurrency news was set against a minor crash in the cryptocurrency markets this week. While bitcoin was adopted as legal tender in El Salvador, it experienced a 19% crash, which spilled across to several altcoins. As bitcoin prices steadied throughout the remainder of the week, the SEC fired shots that could disrupt crypto-innovation, Standard & Chartered outlined views for the future of Ethereum, and Mastercard acquired a blockchain intelligence partner.
- El Salvador purchases over 400 bitcoin as the cryptocurrency becomes legal tender
- SEC threatens Coinbase with legal action
- Ether staked in Ethereum 2.0 surpass 7.5 million
- Mastercard continues to invest in the blockchain sector
- Big-ticket reports to watch out for this week
Bitcoin dives on the same day as bitcoin adoption in El Salvador
Anticipated as a major bullish event for bitcoin, and cryptocurrencies in general, last Tuesday bitcoin became legal tender in El Salvador. The new Bitcoin law means that bitcoin is now a legal currency, alongside the US dollar, and can be used to make purchases and repay debts. Unexpectedly, the news was met with a minor crash in cryptocurrency prices.
Ahead of the law taking effect, the government of El Salvador had already begun to purchase bitcoin. A tweet posted by the President, Nayib Bukele, detailed the acquisition process. “El Salvador has just brought its first 200 coins. Our brokers will be buying a lot more as the deadline approaches.” By Thursday the government held over 550 coins. Alongside the bitcoin purchases, the President is also pushing the use of the new ‘Chivo’ cryptocurrency wallet app among residents. Residents will be able to send BTC to intended recipients almost instantaneously using the app.
The move to bitcoin is hoped to increase the amount of disposable income for residents, who usually lose large sums to cross-border transaction fees. Many are frustrated with the high-cost, and long process that is currently offered by most payment providers. $6 billion worth of remittances flow into El Salvador each year and a large proportion of that is collected by the companies transferring funds. It is believed that organizations such as Western Union and MoneyGram will lose out on $400 million per year if the use of bitcoin scales.
The ex-intelligence consultant for the National Security Agency (NSA) and Central Intelligence Agency (CIA), Edward Snowden, commented on El Salvador’s bitcoin adoption during the week. The analyst expects that other countries will quickly follow El Salvador, which means those that hesitate will find it harder and harder to acquire bitcoin. He elaborated that Bitcoin’s “design massively incentivizes early adoption.”
While positive for the cryptocurrency industry, and celebrated by many in the crypto community, the markets took a sharp turn lower during Tuesday’s trading. The price of bitcoin, which had been steadily climbing, crashed from $52k to $43k in a matter of minutes. For the remainder of the week, prices steadied between the $44k to $46k range.