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Highlights
- The world’s largest cryptocurrency fell over ten per cent in a matter of hours, wiping billions of dollars off the value.
- Of the top ten cryptocurrencies by market capitalisation, seven suffered losses of more than ten per cent in the past 24 hours.
- Bitcoin’s latest significant loss highlights one of many reasons why crypto is not ready to go mainstream.
Several major cryptocurrencies suffered losses today following bitcoin losing significant value in a relatively short period of time.
Bitcoin is valued at US$45,201.95 as of September 8, 2021, after a drop of around 13 per cent from it stood yesterday.
The world’s largest cryptocurrency fell over ten per cent in a matter of hours, wiping billions of dollars off the value.
The dramatic price drop comes a day after Central American nation, El Salvador, made Bitcoin legal tender.
The Cause and Effect
Of the top ten cryptocurrencies by market capitalisation, seven have suffered losses of more than ten per cent in the past 24 hours. Two of those cryptos – Tether and USD Coin - are stablecoins, which have stayed at zero, while Solana (SOL) has decreased 14.48 percent in the past 24 hours.
Economist Peter Schiff tweeted this morning that Bitcoin’s loss was a perfectly orchestrated “pump-and-dump” by the Bitcoin whales. He finished off by welcoming El Salvador to Bitcoin.
The liquidation of more than US$3 billion in long positions by centralised crypto exchanges was also a contributing factor to Bitcoin’s plunge. Such liquidations occur when trades cannot fulfil margin requirements for holding long or short positions.
El Salvador
Meanwhile, El Salvadoran President, Nayib Bukele, tweeted he would be buying the dip, adding 150 new coins to the 400 purchased ahead of yesterday’s rollout.
Yesterday, EI Salvador became the first country to adopt Bitcoin as legal tender, with the country purchasing around US$20.9 million worth of Bitcoin before formally adopting it as one of its official currencies alongside the US dollar.
Following Salvador’s Bitcoin adoption yesterday, the government temporarily unplugged a digital wallet to cope with heavy demand.
President Bukele had earlier stated the crypto process is a learning curve, where everything can’t be achieved in a day or a month.
Exchange Outages
During the flash crash, crypto exchanges faced problems pertaining to their users’ transactions.
Coinbase, Global Inc, and Kraken said they faced interruptions in some transactions on their platforms.
Meanwhile, NASDAQ-listed Coinbase said some transactions were delayed and even canceled, saying that their apps might be experiencing errors. The exchange later updated that Coinbase card swipes problems had been resolved and that transactions were now functioning normally. Coinbase shares slid 4.02 per cent in the wake of yesterday’s transaction delays.
The Gemini exchange said it temporarily entered a full-maintenance period to address an exchange-related issue that had caused delays on the platform.
Why Crypto Isn’t Ready for the Mainstream
Bitcoin’s latest loss highlights one of many reasons why crypto is not ready to go mainstream.
While supporters of Bitcoin had been optimistic over El Salvador’s adoption of the cryptocurrency, the latest crash is evidence that the crypto revolution has some way to go.
The major issue Bitcoin and the wider crypto market faces is volatility. The fact that they can lose a fifth of its value in a matter of hours – as was the case with Bitcoin overnight - remains a problem and undermines digital currencies as a stable choice.
