Today is one of the greatest days in Bitcoin history, with one of the most fundamental upward moments: The cryptocurrency has officially become legal tender in El Salvador. But the Bitcoin price is not responding as expected.
Instead, the market responded with an absolute bloodbath and a drop of $ 10,000 per coin. Could this mean Bitcoin’s big deal was just a “buy the rumor, sell the news” event? Or will this moment have a lasting effect despite the sell-out?
Bitcoin price loses almost 20% in El Salvador’s bloodbath
Bitcoin price is down more than 19% intraday on what should be its time to shine. The leading cryptocurrency by market capitalization before it turns into a teenager has become legal tender in the country of El Salvador.
The country itself bought 400 BTC to distribute to adults who use the government-run Chivo app. Other nations and individuals are buying BTC to support milestone in cryptocurrency history today.
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The rise of virtually worthless via the dark web to a nation’s legal tender is just incredible. The potential impact of this move and its dramatic impact on cryptocurrency adoption and acceptance around the world cannot be denied.
However, for some reason, Bitcoin price is not responding with the upward momentum it had before the law went into effect, but why?
Bitcoin price is down almost 20% today | Source: BTCUSD on TradingView.com
Whales are selling the news as BTC loses $ 10,000
There is a saying in finance that goes, “Buy the rumor, sell the news”. In the case of El Salvador, it was not rumors to this day, but preparation for the historic debut. Another recent example of such a scenario was Coinbase Global’s debut on the exchange. Before that it was Bakkt and before that it was the launch of CME BTC Futures in December 2017. Big debuts weren’t good for Bitcoin.
Smart money investors bought back Bitcoin when the blood was fresh and flowing, knowing full well that that day was coming. As of today, profit taking could reset the top cryptocurrency by market capitalization.
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These investors or traders may not be pessimistic about Bitcoin, but profit-taking is never a bad idea. Breaking the level could be a confirmation that the bull run is back on and that smart money is smart – are more than ready to wait for such a signal.
The profit-taking might have had an unintended effect on the liquidation of over-indebted long traders, creating a cascading effect of reaching stop-losses and causing the price per BTC to rise by more than $ 10,000 as a result.
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Featured image from iStockPhoto, charts from TradingView.com