Crypto market crash Tuesday – key developments

Highlights

• Bitcoin and other cryptocurrencies saw a freefall on Tuesday morning after a supposed meme effect and a glitch in the Chivo Wallet created by El-Salvador to popularize cryptocurrency use.
• The value of the global cryptocurrency market was down around 10.7% in the last 24 hours, as per coingecko.com.
• Also, a total of US$3.59 billion worth of cryptocurrency withdrawal/liquidation has been made in the last 24 hours, according to bybt.com.

The global cryptocurrency market has seen a freefall in the last 24 hours. Of the top 10 cryptocurrencies based on their market capitalization, eight currencies have declined. Dogecoin was the hardest hit, with an 18.5% drop in value in the past 24 hours to Tuesday evening.

Bitcoin saw a volatile session on Tuesday. It plunged sharply in the morning but recouped later. It was trading at US$47,182.52, down 8.2%, in the past 24 hours. Its trading volume during the period was US$58,825,291,458, and its market cap was US$887,475,099,545.

Overall, the value of the global cryptocurrency market was down 10.7% to US$2.18 trillion in the last 24 hours, as per coingecko.com. A total of US$3.59 billion worth of cryptocurrency withdrawal/liquidation was made, of which, US$3.41 billion transactions were executed in the 12 hours ending at 12:31 pm ET, according to bybt.com.

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Source: Pixabay

Bitcoin’s circulating supply currently is 18,809,412, and it can supply a maximum of 21,000,000.

El Salvador adopts Bitcoin as a national currency

El Salvador, a middle American country, on Tuesday adopted bitcoin as a national currency, marking it the world’s first country to make the digital coin a legal tender.

The country’s legislative assembly had cleared the Bitcoin bill in a majority vote in June. The new law authorizes the country’s financial institutions to accept cryptocurrency as a form of payment, including tax payments.

The government has even created a Bitcoin wallet named ‘Chivo,’ which comes with a pre-loaded US$30 for anyone who registers with a Salvadoran national ID number.

However, on Tuesday, some technical glitches were observed in the wallet, forcing the government to temporarily disconnect the service, which could be one of the probable reasons for the sharp fall in cryptocurrency prices.

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Salvador’s President Nayib Bukele, who rose to power in right-wing populist support in 2019, is passionate about cryptocurrency. On Tuesday, the 40-year-old president tweeted that the government has bought 150 more Bitcoins, taking the total to 550 coins worth millions of dollars. Now, both the US dollar and Bitcoin will be accepted as legal tender in the country.

Besides Bitcoin, other cryptos also fell in the past 24 hours. Polkadot (DOT) fell 16.3%, xrp (XRP) fell 16.0% and Cardano (ADA) plunged 15.7%. Bitcoin had touched a record high of about US$65,000 in April.

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Bottomline

The cryptocurrency market is volatile. Investors must have the risk-tolerance capacity before foraying into the market. Also, cryptocurrencies do not have a centralized authority to monitor transactions, and they could be prone to price volatility driven by social media trends. Therefore, investors must carefully evaluate cryptocurrencies before investing.