BTC Market Wrap: Bitcoin Plummets as El Salvador Buys the Dip
Bitcoin has had a rollercoaster of a month so far. The legacy coin hit $50K for the first time since May. Many analysts believe exuberance in the market was largely driven by retail activity. It only took a few hours, however, for the bears to get back in action and push it beneath that level. At the time of writing Bitcoin is finding strong support around its 200-day moving average at $44,000 – this after a sharp sell-off on the 8th of September.
El Salvador officially became the first country to adopt Bitcoin as a national currency. Crypto enthusiasts aptly commemorated this achievement as “B-Day”. Bitcoin is now legal tender alongside the US dollar, which has been El Salvador’s official currency since 2001. The Salvadoran government is rolling out Bitcoin ATMs and snazzy kiosks. They are also offering $30 worth of BTC to those who download its govt-run Bitcoin wallet, Chivo. Not everyone in El Salvador supports the move though. The government plans to spend $225M+ in the rollout, but ~65% of Salvadorans do not want the govt to spend tax money on Bitcoin adoption, and 80% lack confidence in BTC altogether.
BTC is down about (-0.45%) over the past 24 hours, with sellers in control of the $50,000 resistance zone. Many analysts point to the ‘failed’ launch of Bitcoin as a currency in El Salvador as well as the IMF’s comments thereof as a major trigger in the mass sell-off. The wild plummet, however, was also compounded when billions of dollars in long positions were liquidated. In fact, $3.7 billion worth of trading positions were liquidated to be exact – this accounted for over 92% of all crypto futures positions. Wow. Of those, degen platform Bybit took on $1.3 billion worth of liquidations alone. It was followed by Huobi ($836 million), Binance ($795 million), OKEx ($400 million), and Deribit ($115 million). El Salvador, however, were happy to buy the dip adding 150 BTC to their balance with president Nayib Bukele even taunting the IMF on Twitter – thanking them for the role they played.
Alt-coins: SOL takes the Stage
On Sept. 09, SOL’s price sky-rocketed to an ATH of $214.96. In the past 30 days alone SOL has posted a 125.5% gain. It has now been catapulted into 7th place as the largest crypto by market cap and is testing smart contract poster-child, Ethereum. SOL’s impressive rally was finally up-ended when the Solana mainnet beta encountered a large increase in transaction load which peaked at 400,000 TPS. This crashed the network for over 17hrs. SOL is down 17% in the past 5 days. Google Trends – a widely used tool to gauge retail activity – is currently returning a value of 100 for the worldwide search query “how to buy Solana”. Retail investors generally have a reputation for being late entrants in a bull run and their entry often coincides with the exit of larger institutional investors and major market tops.
SOL’s impressive run this past two months is courtesy of renewed interest in Ethereum alternatives amid the explosive growth of non-fungible tokens (NFTs). Solana hosted the launch of the NFT Degenerate Ape Academy on Aug. 15, which featured a collection of 10,000 cartoon apes. They were sold out in just eight minutes and involved 96,000 SOL ~ $5.9 million. The sales success was a testament to SOL’s use case as a DeFi capacitator. There are now a few players vying for the throne of the Smart Contract Platform Coin.