On the day that Bitcoin fell by 20%, El Salvador jumped into ‘water ride’ Hankyung

© Reuters. The day Bitcoin plunged 20%, El Salvador jumped into a ‘water ride’

Photo = AFP Yonhap News

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On the 4th, while the bitcoin price plunged by nearly 20% in one day, El Salvador, the only country in the world to adopt bitcoin as a legal currency, is attracting attention by ‘tracing the bottom’.

El Salvador’s President, Nayb Bukele, posted on his Twitter at 2:19 pm (Korean time) on the same day that “El Salvador just bought 150 in a bear market.” He explained that the average unit price of additionally purchased bitcoins was $48,670 each. This means that they spent an extra $7.3 million (8.6 billion won) in Bitcoin.

Coincidentally, El Salvador secured Bitcoin at an exquisite timing that was close to the ‘bottom’ on this day. According to Coinbase, the largest cryptocurrency exchange in the United States, Bitcoin, which was around $56,000 the day before, slid to $45,111 around 2:25pm on the same day, then rebounded slightly and maintained around $47,000. President Bukele reposted his regrets, saying, “Damn, I missed the low by 7 minutes.”

El Salvador owns more than 1000 bitcoins at the national level, and has been buying more whenever a recent short-term plunge has occurred.

Justin Sun, the founder of the cryptocurrency Tron (TRX), wrote on Twitter that day, “I bought 100 bitcoins at $47,267 each at the suggestion of President Bukele.” President Bukele responded by saying, “If you want to match us, you have to spend a few million more dollars and buy 50 more.”

Cryptocurrency media Cryptopotato reported that “El Salvador is the most optimistic country for Bitcoin.” The country accepted Bitcoin as a fiat currency along with the dollar in September, and announced plans to build the world’s first ‘Bitcoin City’ next year.

CoinDesk analyzed, “The reason the cryptocurrency has fallen to its lowest level since the end of September is the result of increased uncertainty due to the mutation of the COVID-19 micron and inflation concerns from the US central bank (Fed).” Fed Chairman Jerome Powell said on the 30th of last month that “it’s time to stop using the word ‘temporary’ when talking about inflation.” If the US tightens money lines through early tapering (reducing asset purchases), it will be bad news for the risky asset market, including cryptocurrencies.

There are mixed views as to whether the day’s decline is the beginning of a bubble burst or an opportunity to buy at a low price. “Cryptocurrency shouldn’t exist,” said Charlie Munger, vice president of Berkshire Hathaway, Warren Buffett’s best friend and cryptocurrency critic, at an event in Australia the day before. Regarding China, which has banned all cryptocurrency mining and distribution, he said, “It’s the right decision” and “I respect the Chinese.”

The price of altcoins (other cryptocurrencies excluding Bitcoin) is also falling as the ‘big boss’ Bitcoin, which accounts for 40% of the total cryptocurrency market capitalization, collapses.

According to Coinbase, as of 11 p.m. on the same day, Bitcoin -16.85%, Ethereum -14.22%, Solana -18.85%, Ada -17.65%, -20.70%, Polkadot -22.63%, Dogecoin -20.63%, Luna -17.11%, Shibainu -18.59%, and Chain -20.19% recorded declines.

Reporter Im Hyun-woo [email protected]

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