In June, nation-state El Salvador announced plans to officially accept Bitcoin (BTC) as a currency. The official start date was September 7, and the run-up sent crypto shills into overdrive.
Hype and speculation that crypto prices were set to soar brought buyers in their droves.
Only for outflows to follow.
After enjoying a brief high above $52k per BTC, the price crashed below $43k – a whopping 17%.
No stability
Volatility in crypto is nothing new. It’s the name of the game. But for it to become widely adopted people need reliability and some level of plateau to keep them invested.
Photographer: Thought Catalog | Source: Unsplash
Otherwise, it’s just another get-rich-quick scheme, with a few winners and many losers.
During the El Salvador dip, Coinbase (NYSE: COIN) and other crypto exchanges crashed. With errors flashing and orders canceled, customers were unable to trade their crypto.
This is also not new. But with so much recent investment, Coinbase has a $56 BILLION DOLLAR market cap (down from $86bn at IPO in June), surely, it should be better prepared for such periods of volatility.
Within hours of the El Salvador debacle, the United States Securities & Exchange Commission (SEC) threatened to sue Coinbase over the handling of its Lend program. Details of the legal action are slim, but the purpose of the program is to allow users to earn interest on several crypto assets on the platform (i.e. 4% yield on USD Coin).
It wasn’t just Bitcoin enduring a fall from grace. Its peers Ethereum, Cardano, Binance’s BNB, Ripple’s XRP, and the meme-based Dogecoin all endured a sharp sell-off too.
Global central bankers continue to issue warnings.
Riksbank Governor Stefan Ingves said:
“Private money usually collapses sooner or later,”
Nevertheless, there is much discontent in the world and the capital markets are displaying many signs of unusual behavior.
If the S&P 500 endures a significant correction, it could add fuel to the bullish Bitcoin narrative.
Indeed, British multinational bank Standard Chartered sees the Bitcoin price hitting $100,000 by early next year.