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Bitcoin suffers hefty loss after chaotic El Salvador debut

Click to play video: 'Protesters in El Salvador march against adoption of bitcoin as legal tender' Protesters in El Salvador march against adoption of bitcoin as legal tender
WATCH ABOVE: More than 1,000 people marched in El Salvador's capital on Tuesday to protest the adoption of bitcoin as legal tender, amid a bumpy initial rollout of systems to support the digital currency. The protest came as El Salvador's government was rushing to iron out technological snags in bitcoin's first-day rollout – Sep 8, 2021

Bitcoin licked its wounds on Wednesday, a day after its heaviest losses in 2-1/2 months as El Salvador’s historic adoption of the crypto asset as legal tender caused chaos online and on the street.

The coin last traded at US$46,560, having endured wild trade the day before in which it hit a near four-month high of $52,956 before plunging 11.1 per cent, its largest fall since June 2.

Analysts said the sharp retreat was partly due to investors who had bought the rumor of El Salvador’s move now selling the fact.

Read more: El Salvador becomes 1st country to adopt bitcoin as legal tender

Click to play video: 'El Salvador becomes 1st country to adapt Bitcoin as legal tender' El Salvador becomes 1st country to adapt Bitcoin as legal tender
El Salvador becomes 1st country to adapt Bitcoin as legal tender – Sep 7, 2021

“I think there was some anticipation building ahead of that event (El Salvador), similar to what we saw ahead of Coinbase listing on Nasdaq,” said Henrik Andersson, chief investment officer at Apollo Capital, a crypto asset fund in Melbourne, Australia.

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At one point on Tuesday, the digital currency fell as much as 18.6 per cent, wiping out more than $180 billion from the market.

It was a historical day for bitcoin as El Salvador’s experiment of making it legal tender got off to a bumpy start.

Technological glitches hampered its use while street protests by mistrustful citizens broke out in the Central American country.

Click to play video: 'El Salvador 1st country to make Bitcoin legal tender' El Salvador 1st country to make Bitcoin legal tender
El Salvador 1st country to make Bitcoin legal tender – Jun 9, 2021

As bitcoin wobbled, Salvadoran President Nayib Bukele said his government purchased an additional 150 bitcoins on Tuesday, worth around $7 million.

“That has underscored the difficulty in trying to protect the value of bitcoin as its own currency,” said Nana Otsuki, chief economist at Monex Securities. “The buying didn’t seem to be effective in halting its fall.”

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Amid the trading frenzy, major U.S. cryptocurrency exchanges Coinbase Global Inc, Kraken and Gemini struggled with delays in some transactions. All of them said their systems have since been restored.

Separately, the U.S. securities regulator has threatened to sue Coinbase Global if the crypto exchange proceeds with plans to launch a program allowing users to earn interest by lending crypto assets.

(Reporting by Hideyuki Sano, Anushka Trivedi; Editing by Sam Holmes)

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