Bitcoin dropped by as much as 18% — with MicroStrategy losing about $660 million on the value of its BTC investments.
In celebration of El Salvador’s historic adoption of Bitcoin as a national currency on an equal footing with the U.S. dollar, the crypto community christened Sept. 7 “Bitcoin Day.”
A Twitter and Reddit-based movement called on people to buy $30 worth of BTC in support of the Central American nation, which is giving its citizens $30 in Bitcoin for downloading the national Chivo Bitcoin wallet. The idea was to pump Bitcoin’s price on the day.
That Bitcoin Day plan could have gone worse. It would have taken some doing, but it could have.
For instance, Bitcoin could have flash-crashed 20% instead of the 11.72% it did.
Oh wait. At midnight on Sept. 8, CoinMarketCap put Bitcoin’s 24-hour high at $52,741.70, and the low at $43,285.21 during the 30-minute crater around 3:00 p.m. UTC. Which is about 18%. So, close enough.
That cost derivatives traders $3 billion as positions were liquidated. Bitcoin’s market cap ended the day down about $300 million, having dipped as low as $400 million.
But, the International Monetary Fund could have flat out said no to the $1.3 billion loan El Salvador is seeking. Or the country could have had an earthquake.
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No Love from Big Finance
While causing joy in the Bitcoin and broader crypto community, President Nayib Bukele’s hastily announced Bitcoin embrace has caused consternation among central bankers, finance ministries, bond credit rating agencies, and international organizations like the IMF, which said in a July blog post:
“As national currency, cryptoassets — including Bitcoin — come with substantial risks to macro-financial stability, financial integrity, consumer protection, and the environment.”
Notably, it highlighted the extreme volatility of privately issued cryptocurrencies.
While the post did not mention El Salvador specifically, the Financial Times said on August 3 that the IMF’s “warning suggests 40-year-old president Nayib Bukele’s plans could complicate relations” as the country seeks its 10-digit loan.
Then there are the Salvadorans themselves, two-thirds of whom opposed the move in a recent poll, according to Reuters.
Excitement Remains High?
Still, none of that could dampen the Bitcoin faithful’s spirits — a group that includes Bukele, who promptly announced that the government would take advantage of falling prices to buy another 150 BTC on top of the 400 it already purchased.
That led Bitcoin evangelist Anthony Pompliano — known far and wide as “Pomp” — to tweet:
“A nation state is buying the bitcoin dip. Unreal.”
He soon added: “What a historic day. Will be the first country of many. Onwards!”
Then there’s BitGo, which is providing the Chivo wallet’s technology. (Which promptly collapsed today, although to be fair it was a server issue, not BitGo. Besides, so did Coinbase, Kraken, and Gemini also ran slow and had downtime.)
Mike Belshe, CEO of the crypto unicorn BitGo, told Forbes on Bitcoin Day:
“This is an opportunity to build financial freedom for the people of El Salvador. The ability to send money in a hurry on a Saturday night, when banks are closed, across the planet and at almost no fees, it's hard to put into words how empowering that is, and what we'll see in El Salvador is, people will start figuring it out.”
And Yet...
Much of crypto Twitter seemed fairly quiet on a day as historic as Sept. 7.
Bitcoin’s foremost corporate proponent, MicroStrategy CEO Michael Saylor started the day tweeting out a screenshot of his $30 Bitcoin buy, along with a quote from Chinese philosopher Lao Tzu:
“A journey of a thousand miles begins with one step."
That was about three hours before Bitcoin cratered.
Post-crash, his only comment was to call the layer-two scaling solution Lightning Network — which El Salvador is using — “indestructible money moving at the speed of light,” along with a video clip showing how easy it is to pay with BTC at an El Salvador Starbucks.
Which sounds pretty positive. However, compare it to the year-old tweet pinned to the top of Saylor’s Twitter feed, which begins:
“#Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth.”
Then again, MicroStrategy’s 105,084 BTC did lose about $660 million on the day, so subdued (for him) is understandable.
