Volatility has returned to the cryptocurrency market, with Bitcoin trading in a “buy the rumor, sell the fact” scenario. El Salvador, on the other hand, seemed unconcerned, as President Nayib Bukele purchased the dip.
Bitcoin (BTC) investors profited on Tuesday, as El Salvador announced its intention to recognize the digital currency as legal cash, a historic step that could have significant ramifications for global adoption.
Bitcoin’s price plummeted to $42,900 on Tuesday, according to Cointelegraph Markets Pro, after reaching local highs north of $52,800 on Monday. Between the peaks and troughs of the preceding 24 hours, the flagship cryptocurrency fell approximately 19 percent.
The price of bitcoin appears to have recovered from its intraday low of $42,900. Pro Salvadoran President Nayib Bukele revealed that his government purchased the drop during the selloff’s depths. El Salvador conducted its first Bitcoin purchase Tuesday, on the eve of the Bitcoin Law taking effect. The initial purchase of 200 BTC was estimated to be worth approximately $10.4 million.
Bukele stated less than five minutes after the initial buy-the-dip tweet that Bitcoin’s “discount is coming to an end.” He also expressed gratitude to the International Monetary Fund, or IMF, for assisting his country in “saving a million dollars in the printed paper” through the purchase of Bitcoin by his government. To put this in context, the IMF has condemned El Salvador’s Bitcoin foray. Its warnings regarding El Salvador’s plan may have played a role in the market’s recent bout of volatility.
El Salvador now owns 550 bitcoins, which are currently worth approximately $28.8 million at current pricing. Volatility in the bitcoin market is nothing new. Between May and July, the combined market cap of all coins was halved, as a combination of technical trading, profit-taking, and fear-inducing news pulled Bitcoin from a peak of $65,000 all the way down to $29,000. Over the last month, the market has mounted a remarkable recovery, with Bitcoin regaining $50,000, Ether (ETH) reaching $4,000, and the overall market worth returning to above $2.4 trillion.
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