The tumultuous sell-off came during President Bukele’s first El Salvador national Bitcoin day – an event which saw Bitcoin (BTC) formally become legalised tender. The crypto-supporting government offered to give away $30 in Bitcoin to all citizens who decide to download its BTC wallet Chivo – slang for ‘cool’ in El Salvador.
What caused the flash crash?
The flash crash was widely unexpected, and can’t be attributed to any breaking negative news. Bitcoin day was expected to be very positive for the cryptocurrency, and international supporters had pledged to buy $30 worth of BTC today as a show of support for El Salvador’s government.
President Bukele was quick to point his finger at his culprit.
It appears the discount is ending 🥲
— Nayib Bukele 🇸🇻 (@nayibbukele) September 7, 2021
To say Bukele’s government has had a strained relationship with the Washington consensus would be an understatement.
Despite efforts between the IMF and El Salvador to find a way of working together on Bukele’s ground-breaking policy initiative to legalise Bitcoin (BTC) as tender, the IMF ultimately opposed the decision citing “macroeconomic, financial and legal issues”.
The same can be said of other Bretton Woods Institutions such as the World Bank which flatly refused to help implement the policy in the country.
This has led many in the crypto community – including Bukele himself – to accuse the IMF and World Bank of stitching up Bitcoin Day by manipulating the price in order to make his policy initiative seem like a failure in the press.
Other analysts offer a different explanation with some citing mass liquidation of leveraged derivatives trading positions as the driving cause.
Needless to say, the crash has caused ripple effects right across the market, with alt coins taking some big hits.
Many took to twitter to support President Bukele and Bitcoin Day despite the troubled price action.
So many people want @nayibbukele to fail:
– World Bank
– US Gov
– Opposition parties
Yet if he succeeds with his ambitious #bitcoin project he will raise up the entire population of El Salvador.
Imagine wanting these people to suffer more…
— Peter Mc$30 (@PeterMcCormack) September 7, 2021
Other voices were less supportive of the policy decision, with businessman Peter Schiff (a proponent of gold investing) criticising the president.
Welcome to #Bitcoin #ElSalvador. Your national "currency" just lost over 15% of its purchasing power in under an hour. Get use to it. Just another perfectly orchestrated pump-and-dump by the Bitcoin whales. Too bad this time they had to sacrifice an entire nation to pull it off!
— Peter Schiff (@PeterSchiff) September 7, 2021
Twitter users in El Salvador took to the platform to share their excitement at the new mass adoption of cryptocurrencies in day-to-day life.
This is to all the critics who said #Bitcoin would never be used to buy coffee. Just payed for mine at Starbucks in #ElSalvador. I just hope this doesn’t become the new 10,000 BTC pizza… pic.twitter.com/JXXGJbKKOG
— Mario Aguiluz (@maguiluz301) September 7, 2021
Finally, Changpeng Zhao – inevitably exhausted after another day dealing with Binance’s regulatory headaches – appeared almost philosophical in his advice to traders.
To be a successful trader, you need to handle two emotions: greed and fear.
— CZ 🔶 Binance (@cz_binance) September 7, 2021
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