Bitcoin Flash Crash as El Salvador Launches It as Official CurrencyPublished September 18, 2021 by Elana K
Bitcoin crashed approximately 20% following its rollout as one of the official currencies of El Salvador. The government is still hopeful that adopting the cryptocurrency will save the country money in the long-run.
What was supposed to mark an exciting milestone turned into a Bitcoin crash of 10% in just one hour and a total drop of 20% at one point. The cryptocurrency’s launch in El Salvador took place on Tuesday, September 7, but the rollout was mired in glitches that led to a “flash crash,” highlighting the volatility of the industry instead of celebrating the financial savvy El Salvador hoped to demonstrate.
Bitcoin’s Tuesday decline continued until Wednesday, and the government of El Salvador bought 150 more bitcoin during the dip in the hopes of earning significantly when the cryptocurrency eventually rises.
The glitches happened as Apple, Google, and Huawei didn’t support the government-backed digital wallet, Chivo. President of El Salvador, Nayib Bukele, tweeted at the companies, “Release him!” with an angry red-faced emoji. There was also a user registration overload and Chivo servers had to be pulled offline between the hours of 1 am and 6 am to fix the bugs.
Support and Opposition
Needless to say, the opposition leader was pleased with the launch’s rocky start, saying that the crash cost the country $3 million. Protestors also took to the streets to oppose the adoption of bitcoin as legal currency, but the government maintains that it can be good for El Salvador.
The government predicts that using bitcoin can save the country $400 million a year in transaction fees from ex-pats who send money back home, quite a common occurrence. To encourage adoption, the government has given each citizen $30 worth of bitcoin and installed ATMs that will allow bitcoin to be converted into dollars and withdrawn without commission from Chivo.