After breaking above $52,000 late Monday and reaching its highest level since May, the price of bitcoin dropped on Tuesday.
The drop occurred as El Salvador prepares to accept the biggest cryptocurrency by market capitalization as legal tender, making it the first government to do so. On Tuesday morning, Bitcoin fell by as much as 16%. Bitcoin was last trading at $47,223.26, down nearly 9%.
MicroStrategy and Coinbase, two crypto-related equities, also dropped around 6% and 3.5%, respectively. Coinbase users are seeing “elevated rates” of delayed or canceled transactions, according to a late-morning tweet from the crypto exchange. Around the same time, Kraken, another prominent crypto exchange, said it was looking into delays for users utilizing instant funding options as well as rejected card payments.
El Salvador’s government-run bitcoin wallet, Chivo, was temporarily deactivated early Tuesday to enhance the capacity of the servers, which were preventing new users from installing it, President Nayib Bukele stated in a tweet around 7:00 a.m. EST.
Businesses will be forced to take bitcoin for products and services under the new rule, however, merchants that are not technologically capable of doing so will be excused. El Salvador’s government has deployed 200 bitcoin ATMs around the country. It has purchased 400 bitcoins worth about $20 million and is preloading $30 worth of bitcoin into Chivo wallets for Salvadorans who register.
On social media, some traders are announcing that at 3:00 p.m. ET, they would buy $30 worth of bitcoin in their local fiat currencies to honor and support El Salvador’s new law. However, as the day progressed, bitcoin values began to fall.
Bitcoin proponents have long argued that the cryptocurrency might be used as a medium of exchange, for remittances, and even by central banks dealing with significant currency depreciation in Latin America.
