Cryptocurrencies and related stocks are facing less volatility this morning following Tuesday's plunge, which came as Bitcoin became legal tender in El Salvador.
El Salvador's rollout was not without its glitches, with the country's digital wallet having to come offline for fixes. But social media also highlighted positive stories, such as one user tweeting about successfully paying for breakfast at McDonald's with Bitcoin. El Salvador President Nayib Bukele also took to Twitter to provide updates on the rollout and the country's holdings, noting that it was buying the dip. The country now holds 550 Bitcoins, according to the latest update.
Bukele also took a swipe at the IMF, which has said it has economic and legal concerns with the move to make the crypto legal tender, which could complicate negotiations for a much-needed $1B assistance package. "Thanks for the dip @IMFNews. We saved a million in printed paper," he tweeted, with many on the platform then speculating that the IMF had tried to push the price of Bitcoin (BTC-USD) lower, although without specific evidence.
Bitcoin is trading around $45K, having fallen as much as 17% to below $43K yesterday. Ethereum (ETH-USD) is trading around $3,300 after falling below $3,000 yesterday, while Dogecoin (DOGE-USD) is at 24 cents, having held above 21 cents during the selloff.
Bitcoin mining stocks such as Riot Blockchain (NASDAQ:RIOT), Bit Digital (NASDAQ:BTBT) and Marathon Digital (NASDAQ:MARA) are up slightly in premarket trading. Coinbase (NASDAQ:COIN) is also higher, while Grayscale Bitcoin Trust (OTC:GBTC) is flat.
Air leaving the balloon: Yesterday, the talk was about a coordinated effort by retail investors to buy into Bitcoin in the afternoon, highlighted on the Bitcoin subreddit. While it is unclear how many went through with the plan, it fizzled as the price kept sliding. Instead, cryptocurrency watchers speculated that much of the buying interest, both retail and institutional, came leading into Tuesday and then a classic sell-the-news move was triggered.
“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," Leah Wald, CEO of Valkyrie Investments, told CNBC.
“Social media platforms were very cautious over the weekend that a plunge could occur following El Salvador’s big day,” Edward Moya, OANDA senior market analyst, wrote in a note. But while the Bitcoin subreddit had plenty of accusations of market manipulation, there were also optimistic posts about McDonald's (MCD) and other big companies moving to accept the crypto.
“There’s been a giant realization that crypto is not just Bitcoin being bought as a hedge against bad monetary and fiscal policy. More importantly, it’s the web 3.0,” billionaire Mike Novogratz said on Bloomberg. “No investor wants to miss the next internet. I think we just got too excited and this was a little air being popped out of the balloon.” (9 comments)
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