The cryptocurrency market posted staggering losses on Tuesday when a selloff hit the prices of nearly all currencies, undoing gains valued by a retail business mania before the first day El Salvador began accepting bitcoins as legal tender. .
The value of the world’s cryptocurrencies plummeted to a low of around $ 1.9 trillion as of 11:15 am EDT on Tuesday, nearly 15% less than 24 hours earlier and reflecting a loss of more than $ 410 billion, according to the crypto data website CoinMarketCap.
Faced with losses in market value, the bitcoin price dropped 10% to below $ 44,000, the lowest price in nearly three weeks, before quickly reducing some of the losses and settling at approximately $ 46,810 at 11am: 50 am EDT, still 9% lower than a day before.
Meanwhile, ether, binance coin, and Cardano’s ada fell between 13% and 18% each, while Solana was the only token to see an increase in value, rising 8% after an impressive rise. of almost 36% during the past week.
Amid the sudden crisis, Salvadoran President Nayib Bukele announced that the country took advantage of falling prices to buy an additional 150 bitcoins, raising its holdings to 550 coins in total, worth around 25 million euros. Dollars.
Sentiment began to take a hit early Tuesday when El Salvador’s wallet experienced technical difficulties within hours of its debut, forcing President Bukele to announce that he would be temporarily disconnected.
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Then the surge in trading volume fueled speculation about institutions selling large holdings and even led to brief disruptions and trading delays on many of the world’s largest cryptocurrency exchanges, including Coinbase, Kraken, and Gemini.
The strong sell-off came less than a day after analysts at JPMorgan warned in a note to clients that the recent rally in altcoins, or cryptocurrency alternatives to bitcoin and ether, reflected “retail investor mania and foam. of the market ”, rather than sustainable profits for the market.
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“The August rally in non-fungible tokens and the rebound in decentralized financial activity have helped not only ethereum, but also alternative cryptocurrencies that facilitate or plan to facilitate smart contracts, such as Solana, Binance Coin and Cardano,” said the director JPMorgan manager Nikolaos Panigirtzoglou added: “The previous phase of the retail investor mania for crypto markets was between early January and mid-May … and retail investors are making crypto markets look sparkling again.” .
After bouts of retail investment mania in January and May, cryptocurrency markets fell around 13% and 50%, respectively.
El Salvador made history Tuesday by becoming the first sovereign government to use bitcoin as legal tender, clearing the way for residents to pay taxes and other debts with the cryptocurrency, and allowing hundreds of thousands of businesses across the country. accept it as payment.
In addition to its bitcoin buying spree, the Central American country has already marked the occasion with the launch of hundreds of bitcoin ATMs and the debut of a new cryptocurrency wallet, Chivo, powered in part by the digital wallet firm based in California BitGo. Ahead of the boisterous event, bullish bitcoin billionaire Michael Saylor, CEO of business analytics firm MicroStrategy, joined retail investors on Twitter and encouraged them to buy $ 30 worth of bitcoin to show support for the historic feat of The Savior.
“Bitcoin fell in the face of a ‘buy before the big event’ reaction due to El Salvador’s historic moment accepting the cryptocurrency,” Ed Moya, Oanda’s senior market analyst, said in an email on Tuesday, adding: “The Bitcoin’s base remains intact, as prices pave a new trading range between the $ 46,000 and $ 53,000 levels. ”
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