Why Bitcoin, ether, other crypto prices are crashing

Why Bitcoin, ether, other crypto prices are crashing

Bitcoin prices plummeted from more than $52,000 per coin, over 17% to $42,000, before recovering about half of that loss after El Salvador became the first country to adopt Bitcoin as legal tender on Tuesday. However, the rollout stumbled in its first hours and El Salvador President Nayib Bukele said the digital wallet used for transactions was not functioning.

Tuesday’s selloff is the most significant break in the rebound that had lifted Bitcoin almost 75% since late July. Overall cryptocurrency market value fell about $300 billion in the past 24 hours, according to tracker CoinGecko.

The world’s largest cryptocurrency staged a small recovery as Bitcoin prices today were at around $46,757, down 11%. Meanwhile, other digital coins followed the lead with ether fell over 11% to $3,471 whereas dogecoin and cardano prices plunged 15% and 12% to $0.26 and $2.5 respectively. Stellar, XRP, Uniswap also crashed in the range of 15-20% over the last 24 hours.

“Social media platforms were very cautious over the weekend that a plunge could occur following El Salvador’s big day," Edward Moya, senior market analyst at Oanda Corp., wrote in a note, as reported by Bloomberg. Some investors likely bought in anticipation of the nation implementing its Bitcoin law Sept. 7 and then moved to “sell the fact," he said.

According to experts, bitcoin was still in the bull market as long the price stayed above the $43,000 level.

Billionaire Mike Novogratz, chief executive officer of Galaxy Digital Holdings and a long-time cryptocurrency bull, told Bloomberg the market for digital coins was running strong over the last eight weeks and became overbought. Interest from individual investors spiked on the back of large institutions jumping on board the crypto wagon, he said.

David Gerard, author of “Attack of the 50 Foot Blockchain," told the Associated Press that Tuesday’s Bitcoin volatility likely had little to nothing to do with El Salvador. “My first guess was shenanigans, because it’s always shenanigans," Gerard said via email to AP.

“Bitcoin basically doesn’t respond to market forces or regulatory announcements," Gerard said. “That sort of price pattern, where it crashes hugely in minutes then goes back up again, is usually one of the big guys burning the margin traders." Because Bitcoin is so thinly traded, it could also have been a big holder making a large sale to have cash, thus sending the market for a ride, Gerard said.

(With inputs from agencies)

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Why Bitcoin, Ethereum, and Dogecoin Are Falling Today

What happened

The price of most cryptocurrencies fell on Tuesday morning after some hit new highs on Monday night. The price of Bitcoin (CRYPTO: BTC) had dropped roughly 11% as of noon EDT, while the prices of Ethereum (CRYPTO: ETH) and Dogecoin (CRYPTO: DOGE) had fallen roughly 12% and 18%, respectively.

The fall in prices seemed to be attributed to market volatility commonly associated with the cryptocurrencies, and as El Salvador looks to implement a law today that will see Bitcoin accepted as legal tender.

So what

Just before falling this morning, Bitcoin hit its highest price level since May at $52,000. Ethereum had traded close to $4,000 on Monday night, while Dogecoin at one point hit over $0.31 per token.

The price drops come on the day that the Latin American country El Salvador is set to adopt Bitcoin as legal tender, making it the first country to do so. What this means is that citizens in the country can choose to use Bitcoin as payment and businesses must accept it in exchange for goods and services. In addition, citizens will be able to pay taxes in Bitcoin, Bitcoin exchanges will not be subject to capital gains taxes, and the price of Bitcoin will be tied to the dollar exchange rate.

In preparation for the new law, which is set to go in effect at 3 p.m. EDT today, the El Salvador government has purchased roughly $20 million in Bitcoin and installed 200 Bitcoin ATMs across the country. Government-run Bitcoin wallets will be loaded with $30 worth of Bitcoin for citizens who register. Reuters reported this morning that the El Salvador government “had to unplug a digital wallet to cope with demand,” as citizens register for the wallets.

Image source: Getty Images.

Despite the issues, Leah Wald, CEO at the cryptocurrency and alternative asset management firm Valkryie Investments, said she was not surprised by the market’s reaction today, as the news surrounding El Salvador has already been priced in.

“When this move was first announced, it didn’t have nearly as big of an impact on price as some may have expected it might, possibly because El Salvador’s population is less than New York City’s, but also because the announcement was light on details and people were on the fence about how this was going to be implemented,” Wald told CNBC. “Transaction fees, processing times, and other hurdles also make this feel more like a beta test rather than a solution to many of the problems plaguing the country’s poor.”

Wald added that if other Latin American countries begin accepting Bitcoin as legal tender, that could result in a “parabolic” move higher in crypto prices. Many experts believe Latin America could be ripe for adopting cryptocurrencies to help improve money transmission and for central banks that already deal with volatile currencies.

Now what

While the situation in El Salvador will be interesting to watch, I do not see anything that would change my view on certain cryptocurrencies.

I still feel quite bullish on Bitcoin and Ethereum. I am less bullish on Dogecoin, but can acknowledge that the cryptocurrency will likely move in tandem with the broader crypto market, and that it could move higher as stakeholders continue to update the network.

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Cryptocurrency prices tumble and exchange trading falters as snags crop up

A representation of cryptocurrency Bitcoin is seen in this illustration taken August 6, 2021. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo/File Photo/File Photo

NEW YORK, Sept 7 (Reuters) - The price of cryptocurrencies plunged and crypto trading was delayed on Tuesday, a day in which El Salvador ran into snags as the first country to adopt bitcoin as legal tender.

Shares of blockchain-related firms also fell as crypto stocks were hit by trading platform outages. But the major focus was on El Salvador, where the government had to temporarily unplug a digital wallet to cope with demand.

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Bitcoin, the world’s biggest and best-known cryptocurrency, tumbled more than 17% to $43,000 before paring some losses to trade down 9.20% at $47,140.27. Earlier bitcoin had hit a session high of $52,948.00.

Smaller rival ether , the coin linked to the ethereum blockchain network, fell 11.99%.

Major cryptocurrency exchanges Coinbase Global Inc (COIN.O) and Kraken said they faced delays in some transactions on their platforms.

Coinbase said some transactions were delayed or canceled at “elevated rates” and that “our apps may be experiencing errors.” The exchange later said issues with Coinbase card swipes were resolved and that transactions were going through normally.

The Gemini exchange said it temporarily entered a full-maintenance period to address an exchange-related issue that caused performance trouble.

Coinbase (COIN.O) shares slid 4.02%.

Anything related to cryptocurrencies appeared to suffer. Cryptocurrency miners Riot Blockchain (RIOT.O) fell 7.38% and Marathon Digital Holdings (MARA.O) slipped 7.76%.

Shares of MicroStrategy Inc (MSTR.O), a BTC buyer and business intelligence software firm, fell 7.64%.

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Reporting by Herbert Lash in New York, additional reporting by Saikat Chatterjee in London and Aaron Saldanha in Bengaluru; editing by Sujata Rao and Rosalba O’Brien

Our Standards: The Thomson Reuters Trust Principles.