Bitcoin Plummets 4 Million Won in One Hour... Remaining Momentum 'Faint'

El Salvador Introduced Bitcoin as Legal Tender but Faces Setbacks...

[Asia Economy Reporter Gong Byung-sun] The leading cryptocurrency Bitcoin tumbled nearly 10% in a single day, shaking the market. Expectations had risen following the news of El Salvador, a Latin American country, adopting Bitcoin as legal tender, but the news of setbacks caused a sharp reversal.

As of 12:11 AM on the 8th, Bitcoin was trading at approximately 55 million KRW on the cryptocurrency exchange Upbit, down about 9.6% from the previous day. At 11:11 PM the previous day, Bitcoin was hovering around 59 million KRW. It dropped by 4 million KRW in just one hour.

Bitcoin had shown strength earlier this month thanks to El Salvador's experiment. On the 7th (local time), El Salvador announced it would adopt Bitcoin as legal tender and distribute $30 worth of Bitcoin to its citizens. As the first case of a country using Bitcoin as a payment method for its original purpose, this raised expectations in the cryptocurrency market. Fueled by this news, Bitcoin rose more than 10% from the 1st to the 6th of this month.

However, contrary to expectations, problems arose from the very first day of adoption. According to the US economic media Bloomberg on the 7th, the official digital wallet of El Salvador, 'Chivo,' was temporarily unavailable for download on app platforms such as Apple and Huawei. For El Salvador citizens who need to pay with Bitcoin, this effectively blocked economic activities suddenly.

Ria Wald, CEO of Valkyrie Investments, a cryptocurrency asset management firm, explained in an interview with US economic media CNBC, “El Salvador’s population is smaller than New York City’s, and the internet and smartphone penetration rates are low. Adopting Bitcoin as legal tender is akin to experimenting on El Salvador’s poor citizens.”

There is no additional momentum to follow El Salvador’s experiment. News of the launch of a Bitcoin exchange-traded fund (ETF) in the US stock market remains elusive. A Bitcoin ETF signifies entry into the institutional market and provides an opportunity to broaden the investor base, making it the most desired news in the cryptocurrency industry. Expectations grew further after Gary Gensler, known to be favorable to cryptocurrencies, took office as chairman of the US Securities and Exchange Commission (SEC) in April.

However, the SEC is delaying approval of Bitcoin ETFs citing volatility and security concerns. Earlier this month, Chairman Gensler said at the Aspen Security Forum, “If Bitcoin ETFs comply with federal securities laws and regulations, they can protect investors,” but the SEC is reportedly preparing stronger regulations related to decentralized finance (DeFi).

Professor Lee Byung-wook of Seoul National University of Science and Technology said, “Because the cryptocurrency market is imperfect, it can experience sharp fluctuations based on rumors rather than clear information,” and added, “Investors should be more cautious given the recent price increases.”

This content was produced with the assistance of AI translation services.